Start the conversation
I want to talk to you about something Wall Street has been lying to you about – options.
Now you may have heard before that they're "risky" and "not worth it…"
This is financial propaganda.
I spent years on the floor of the American Stock Exchange and have been teaching and trading options for over two decades.
And the truth is… Wall Street doesn't want you even interested in learning options – let alone trading them – because they want to hoard all the profits and leave you at the mercy of the markets.
I'm going to tell you exactly what they're hiding…
The Truth About Options
What most of the billionaires and hedge fund managers on Wall Street want you to believe is that options are too risky, too complicated, and simply not worth your time. They'd rather have you dump hundreds of thousands of dollars on the most expensive stocks out there – so they can take the profits. And they're counting on the misinformation they've put out there about options to keep it that way.
The truth is… the entire reason listed, exchange-traded options first launched in 1973 was to mitigate risk in the stock market and give you leverage. When you buy stock, you're at the mercy of the markets, which could cost you big-time. In fact, U.S. stocks are more expensive now than ever before. So, for example, if you want to buy one share of Amazon.com Inc. (NASDAQ: AMZN), you would have to spend more than $900… for a single share. And more often than not, people want to own more than a single share of stock in their portfolios.
But with options, you can actually control 100 shares of expensive stocks, like Amazon.com Inc. (AMZN) for less than $500. So while Wall Street wants you to shell out over $90,000 for 100 shares of AMZN, you don't have to. You could pay $500 or less to essentially "rent" 100 shares of the stock instead. And since you can control shares of a specific stock, you can also increase your leverage without tying up a large amount of capital in your trading account. In fact, most brokerages require a deposit of only $2,000 or less to get started.
The Wall Street guys don't want you to know this.
They also don't want you to know how easy it is to make money with options – and how much of it you can actually make. They want you to believe that it's simply "too good to be true." But it's not. Options offer an amazing versatility that you can use in a variety of ways to profit from the markets, no matter if they're up, down, or sideways. And in times of high market volatility, options can act as a financial "escape" from the uncertainties of traditional investing methods.
As far as options being too complicated… again, lies.
Options are extremely easy to trade when you know how to use them. And that's exactly why I'm here. I've been trading and teaching options for nearly 25 years, and I love every bit of it. I believe – and I know – that options can unlock a door of new opportunities for you. You can make money on a weekly or monthly basis (or however often you want to trade them) without a morning commute, long work hours, overtime, or any type of physical labor. And the only boss you need to worry about is yourself.
That's why I feel compelled to continue debunking these lies and myths out there by empowering you with the tools you need to be successful and reach your dreams.
So Here's How You Get Started…
Most people seeking to trade options already have a stock brokerage account or a retirement account that allows options trading. And if you don't, all you need to do is open one. That doesn't mean you can just start trading, though… you need to get clearance or authorization from your broker first.
But before you place a call to your broker or go to start the process online, make sure you want to trade options through your brokerage firm. There are stock firms that offer options trading, and then there are options firms that offer stock trading. I like the latter because an options firm knows what a client needs and hasn't just programmed a platform on the side of their equity trading.
Options firms build their platforms from the ground up, offering in many cases easier and more streamlined platforms in which to trade. Commissions are generally lower too, as they're always looking for active traders. So, as simple as this sounds, a starting point for finding the best place for you is to research options trading brokerages with the word "options" in the name.
When you think you've found one, you'll want to research the type of trading platforms they offer. I can't stress enough that trading platforms matter.
Many of the bells and whistles on online trading platforms (especially things like live streaming capabilities) could actually be distracting and even costly when you're first starting out. If you're a day trader, streaming may be more of a benefit to you. But if you're not and are newer to options, web-based platforms may be better suited for you. Here are two to consider:
- Web-based (such as OptionsXpress):
OptionsXpress is great for beginner traders because it's easy to use, from simple option strategies to more advanced strategies. And the platform is set up nicely in a step-by-step format for you when you want to place an order. The one thing you'll want to keep in mind, though, is that web-based platforms, like this, give you more of a snapshot of the market – not real-time updates.
- Computer-based (such as TD Ameritrade):
ThinkorSwim (the active platform of TD Ameritrade) has all the bells and whistles and can chart and analyze stocks on the fly in real time. It also allows you to set up real-time scans and indicators, which include alerts to let you know if a bullish or bearish trade signal is present. Now all this excitement doesn't have its drawbacks – entering orders on a real-time platform could feel a bit daunting because of everything that's happening on the screen.
Whether you decide to go easy (web-based) or bells and whistles (computer-based) entirely depends on your level of experience and how comfortable you are online. If you prefer to not spend a lot of time on the computer, a web-based platform should suffice. If you consider yourself more computer-savvy, perhaps an active trader platform would be better suited for you. And if you're not sure, a web-based platform could be a good starting point, as you can always change your platform when you feel ready.
You're also going to be asked a series of questions when you get started. But don't worry about this part… these questions are only used to determine the level of options trading (known as "clearance") that you qualify for here. While brokers can vary, this is what you're typically asked about:
Investment Objectives: This will range from income on the low side to speculation on the risky side. If you want to be able to trade basic options (simple calls and puts) but would like to eventually trade more advanced strategies, you might want to consider "speculation."
Options Strategies: At one time, I was teaching over 25 option trading strategies. But for the sake of simplicity, here are your basic "levels" of options strategies. What you qualify for will depend on your familiarity and experience (we'll be talking more about these soon):
- Insurance Position
- Level 1: Covered calls
- Level 2: Long calls and puts
- Level 3: Spreads (both debit and credit)
- Level 4: Naked equity puts
- Level 5: Naked equity calls
- Level 6: Naked index calls and puts
Trading Experience: As with the trading strategies above, the higher the number here, the better. If you don't have a lot of experience, think about what you'd like to be able to trade in the future and factor that into your decision. And remember, I'll be here to give you the knowledge and tools you need to be successful.
Personal Finances: This is pretty straightforward and just consist of your liquid net worth, total net worth, annual income, source of income, etc. Keep in mind that your broker can easily verify this information, so you want to be as accurate as possible. And if you're unsure, there are several calculators at your disposal online – or you can contact your financial or tax professional.
Now there's one more thing you want to make sure you have…
Nowadays, you've got a crucial advantage veteran options like me never had when starting out – a virtual trading account.
While virtual trading, or paper trading, doesn't actually involve real money, it's the best way to get familiar with options trading and placing orders before you start using real money. There is nothing like putting an order in backwards to kill your ego (my very first trading mistake) – so take advantage of this awesome tool.
You're about to embark on a journey that could truly change your life. I know it changed mine. And my promise to you is to continue sharing everything I've learned over the past 25 years – including everything Wall Street doesn't want you to know – so you can get everything you've ever dreamed of.
To a lifetime of success…
P.S. I mentioned above that options can make you a lot of easy money – fast. To give you an idea of what I'm talking about, my Money Calendar members have already gotten the chance to pocket 1,534.26% total gains since the beginning of the year. To learn more, click here.
About the Author
Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.
With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.