I started trading stocks about 8 years ago, moved into a mix of options and stocks about 4 years ago and now I only trade options.  I have never touched my 401k retirement money, its safe and sound in a well balanced portfolio.  All of the money I invest in options I can afford to lose and though it would make me upset it wouldn’t substantially set me back in life if I lost it all.  (and to be fair I started with so little that really everything I invest at this point is “the house’s” money)

I have had a variety of people ask me for advice on what to buy and how to trade options.  I’ve went through phases with long email chains of ideas bouncing around with friends but it was never really a good way to communicate.  So I figured I would start this blog, my friends can comment and share ideas on the site and I can have a page that tracks my trades.  I also hope that this can bring me a higher level of discipline since my rash decisions will now be open to the ridicule of my peers.

My friend Vinay first taught me the basics of options (thanks again!!), I read a book called Options for the Beginner and Beyond and then I jumped in.  I have tried a lot of different things, some worked, some didn’t.  But with every trade, win or lose, I have learned something to take into the next trade.

Disclaimer:

What I do is very aggressive, very very leveraged and is basically gambling.  If you can’t afford to lose 100% of what you bet on options don’t do it.  Note I said “bet”.  But this isn’t the lottery, Poker is gambling and yet you see the same group of millionaires at the final table over and over.  There is a stat that 90% of options trades expire worthless, but realize that most options are used to hedge risk and lock in profits on the positions they hold.  If they expire worthless it means for the most part they didn’t have to use the insurance that the options were in place for.  Options for the market are insurance, options for me are like vegas where you can play the part of the house or the sucker on the other side of the table.  I never trade ‘naked’ meaning I will never put a position in that can lose more than the investment and I don’t trade on margin.  You have to manage options trades basically everyday.  If you ‘get busy’ and don’t check for a week or two bad bad things can happen.  It only takes a couple minutes on a smartphone to track so there is really no excuse but if you want to go on vacation and fully unplug for a week than you need to exit your positions because stop loss strategies just don’t work well with options in my opinion.  So in summary, don’t do this unless you can lose everything you bet and not be bothered by it, don’t do it if you can’t check the market at least once a day and don’t do it if you can’t handle the emotional roller coaster.