How to Price and Trade Options: Identify, Analyze, and Execute the Best Trade Probabilities, + Website

CHAPTER 1 Why Trade Options?

I am frequently asked, “With so many places to invest and with the complexity of the markets, wouldn’t I be better off letting a professional manage my money rather than trying to trade options myself?” Couple that with money managers asking, “You wouldn’t do your own brain surgery, would you, so why manage your own money?” I understand one’s reluctance to enter the world of self-directed investing. But after 33 years in the business world and over 26 years in trading, I can assure you that no one cares for your money like you do. Many money managers go through a three- to six-month training program and they are off and running trading your hard-earned savings. Compound that with the fact few managers beat the S&P 500 returns (after fees and commissions) on a consistent basis, and you should begin to wonder why you have not been investing your own capital all along.

The next questions that arise are “But options are so complex, am I not better off just trading stocks?” and “How could I possibly compete with the options professionals?” As a long-time professional options trader who now trades “retail” right along with self-directed investors, I have much to say on this topic. So, let’s begin by looking at the nature of options.

Strategic without Being Directional

If you put three or more market professionals in the room and ask, “Which of you can predict market and individual stock direction the best?” you better be ready for the heated argument ...