I’ll be honest—options trading is intimidating at first. I’m no exception… I nearly swore off options forever after a series of bad beats (more like ego inflated trades) last year. That’s because I was only playing options one way—as a premium buyer. Once I learned the “casino strategy”— the same one I use in my Weekly Windfalls premium service, I knew I was on to something BIG. In fact, I’m pacing for my best trading year yet— and the prospects for 2020 look even better. And now, I want to teach YOU how to make money with options. Just like I taught Shark Tank’s Daymond John. I used to be a teacher after all. And while I miss being in the classroom, I don’t miss the paltry paychecks. So last week I hopped on Twitter for a live Q&A session. The response was so overwhelming, I plan to have weekly Ask Jay video sessions! Follow me on Twitter at @jasonbondpicks, and look for me to be online around 1 p.m. ET on Wednesdays or Thursdays most weeks. You can ask me ANYTHING about options or stocks, and if I know the answer, I’ll walk you through it.
First of all, thank you very much for all the wonderful tweets about my Weekly Windfalls premium service! And while I planned to be online for just an hour taking questions, my Ask Jay session ran long (I told you — I love to teach!), so most everything below has been paraphrased. Don’t @ me, trolls. Now, let’s get to it…
Q: What is the best way to start trading options?
A: Find a mentor that you trust and who you believe can help you reach your goals. It’s just like in sports — great athletes need great coaches. Trading legend Jeff Bishop taught me, and in turn, I taught Kyle Dennis, who made millions and is now running RagingBull’s Fast 5 service! And trust me — I know options trading can be scary. So don’t start until you’re totally comfortable. My Weekly Windfalls premium subscribers are encouraged to look over my shoulder until they’re ready to trade.
Q: What is your forecast for 2020?
A: I don’t really have a long-term opinion, to be honest. There are so many factors up in the air, like the U.S.-China trade war, the Fed, etc… Plus, all I need to make money is a short-term outlook. That’s the beauty of trading weekly options.
Q: What is selling options?
A: This is a fantastic question. Let’s look at a recent trade I made on Apple (AAPL) stock. In a nutshell, by selling 265-strike call options, I bet AAPL would end below $265 by the time the options expired. However, if I’d only sold AAPL calls, I would be considered “naked.” And I only try to be naked in the shower and in bed. In other words, if I only sold the calls and AAPL skyrocketed to, say, $300, my risk would go sky-high. No one wants that. That’s why my Weekly Windfalls recommendations are vertical spreads — meaning I not only sell an option, but I buy some as “insurance” in case the stock moves against me. So, in that AAPL example, I also bought the 267.50-strike calls. This limited my risk, in the event the FAANG stock jumped above $267.50 in the options’ lifetime. I also want to mention that option sellers win about 70% of the time — that’s why Weekly Windfalls is based on the “casino strategy.” Because you’re on the side of “the house” — the odds are in your favor.
Q: Do you have to wait until expiration to close a spread?
A: In short, no. For instance, heading into my live Q&A, I just closed some AAPL spreads with one day to expiration, because it was too close for comfort. I decided to take profits and banked about $11,000.
Q: What is the minimum account you need to sell options?
A: You need a $2,000 account to trade vertical spreads. Now, if you were selling those naked options, you’d need a MASSIVE account, because you wouldn’t have that options “insurance policy” discussed earlier. Also, I’m going to start using TastyWorks for my trades and will post some tutorials very soon.
Q: Do you use stop orders?
Q: What is the best service for new option traders?
A: I may be just a wee bit biased, but I gotta go with Weekly Windfalls! I started the service with a jaw-dropping 19-trade winning streak, and I banked $25,000 just last week. Plus, I’m here to teach you every step of the way, and I even have a live feed to my personal trading account — with trade notes — for premium subscribers (see above). And did I mention I taught Daymond John, “the people’s shark” from ABC’s Shark Tank?
Q: Is RagingBull’s angel investing service still open?
A: No, sorry. Our Boardroom service actually sold out in about 20 minutes! You can try to join the waitlist, though.
Q: What criteria do you use for Weekly Windfalls trades?
A: Another great question! Basically I’m looking for a big-cap stock — like Apple — to make a big move in short order. For bearish spreads, I like to see a Relative Strength Index that shows the stock is overbought. This typically precedes a downturn or consolidation period — meaning it’s ripe for a short-term bearish trade. I also typically look for 2.50-wide spreads, meaning there’s about a $2.50 difference between my sold strike and my bought strike. Once I place the trade, I like to lock in at least 50% of the premium.
Q: Are option premiums higher when volatility is higher?
A: Yes, a stock’s premiums get juicy when it’s unpredictable. I love volatility! More importantly for option sellers, when implied volatility (IV) is higher compared to its norm, premiums will be higher. I absolutely look for high-IV stocks and try to predict when there’s going to be a contraction. Because remember, IVs can skyrocket — but THE ONLY CERTAINTIES IN LIFE ARE DEATH, TAXES, AND MEAN REVERSION. If you sell an option when IV is high, and then it contracts, you stand to make a LOT of money.
To see my full Ask Jay Q&A session, click here. And remember to follow me on Twitter at @jasonbondpicks! I’ll be going live again later this week, and I can’t wait to answer more of your questions. If you’re not already snapping necks & cashing checks — what are you waiting for?