The High Probability Options Trader: Winning Strategies to Take You to the Next Level by Marcel Link

The High Probability Options Trader: Winning Strategies to Take You to the Next Level by Marcel Link

CHAPTER 1

10,000 Hours

How to Turn $2,000 into $1 Million Trading Options Without the
Use of a Time Machine.”
That would be a great book, but unfortunately, I can’t make that kind of
promise. It can happen, as it might have if you were lucky enough to buy
GameStop calls the week before the WallStreetBets subreddit pushed it
from $18 to $450, and managed to get out before it dropped down to $45 a
couple of weeks later. In reality, it is unlikely that someone will do this (and
keep their profits if they do), yet there are folks out there with the grand
delusion that this is normal. The strategies I talk about are not these home
run types of trades; instead, you will learn how to build an account in a
steady fashion while reducing risk and developing as an all-around trader.

FIRST DISCLAIMER
Don’t worry if I mention something you may not understand or if I use a term you haven’t
heard before; it’s not important yet. I do promise that by the end of book everything I
mention will be thoroughly explained and should become part of your vernacular.

QUESTIONS THIS BOOK ANSWERS
Some of the questions you should be able to answer after reading this book
include:
What are the factors that will make my option move in price?
How do option prices erode over time, and how can I benefit from it?
Is an option’s volatility relatively cheap or expensive?
What is the trade’s probability of profit if held to expiration?
How far out in time of an expiration should I use?
What’s the best strike price for my trade?
How can I reduce risk on my option portfolio?
When should I exit to minimize risk?
WHY TRADE OPTIONS?
To make money of course—or could it be to protect your money? Or
maybe to expand your trading capabilities? Though most people get their
exposure to trading by buying stocks, options have the allure of the ability
to make a lot more money with a lot less money than you can with stocks.
Though this is a good way to start—and it’s how I started—it’s not the best
way.
Some investors who own stock get their exposure to options by selling
covered calls to make extra income. This is a better method of using
options, but it’s just scratching the surface of your capabilities. As you learn
the many ways to trade and use options, it will open up many more
advantages over trading stocks.
First, when you trade stocks there are really only two ways to make
money: you can go long by buying a stock hoping it goes up, or you can go
short by selling a stock if you believe it’s going down. With options trading,
on the other hand, you can also make money if the market doesn’t move, or
even if the market moves slightly against you. You don’t even need to trade
for price moves; you can try to capture time decay or discrepancies in the
speed of volatility in two offsetting options.
THE BUSINESS OF TRADING

The High Probability Options Trader: Winning Strategies to Take You to the Next Level by Marcel Link