Show Me Your Options!: The Guide to Complete Confidence for Every Stock and Options Trader Seeking Consistent, Predictable Returns by Steve Burns

Show Me Your Options!: The Guide to Complete Confidence for Every Stock and Options Trader Seeking Consistent, Predictable Returns by Steve Burns

Chapter 1
OPTIONS ARE NOT ASSETS, THEY ARE
BETS.
Stock Trader heard the alarm go off. He rolled over in bed and hit his
beloved snooze button. It was time to head off to his day job, but his mind
rarely stopped thinking of his second job of trading. Trading would be his
ticket out of the nine-to-five corporate world. He wanted to move from being
an employee of a company to an investor in the company. He wanted his
money to work for him and be able to stop working for money. His dream
was financial independence. Of course, all his fellow employees thought he
was nuts. Most of his friends at work could not comprehend ever not having a
job, or that not having a job should even be a goal. Stock Trader, though, was
different; he ignored all the negativity and doubt and just kept on doing what
others believed was impossible.
He beat the S&P 500 year after year
He went to cash and avoided downtrends
He sold stocks short and made money in downtrends
Many months he made more trading than working
He built his accounts over time even during market crashes
As he lay in bed he realized why he continued working so hard at
trading. He wanted the freedom to do what he wanted, when he wanted. His
goal was not material things, oddly enough. He wanted time, he wanted
freedom, and he did not want to be a slave to earning a wage and paying bills.
“Isn’t that gambling?” They would ask him in a concerned and
slightly condescending tone at work.
“No, it is a business like any other. I use the same principles as any
other business. I buy and sell inventory, I follow trends and I manage risk. I
participate in auctions and use best practices to get an edge over my
competitors. The company we work for gambles more than I do,” Stock
Trader would respond. Unfortunately, his audience really didn’t understand
what he was talking about.
With only a few likeminded friends, Stock Trader continued along his
journey in the stock market, trading, reading, and learning. He truly loved the
stock market. He would watch CNBC like other men watched ESPN. While
other men were entering fantasy baseball and football leagues, he was
entering stock trading contests online. For him it was not just about making
money; it was a passion of his, a challenge of both strategy and wit.
Determination and will power separated many winners from the losers in the
stock market. He loved the stock market game.
He had always loved stock trading. He had been fascinated with
quotes and what made stocks move up and down from the time he was a small
child. As a matter of fact, he had an account and was trading something for as
long as he was legally old enough to do so. When he was too young for
stocks, he had collected and traded coins, baseball cards, and comic books.
He did not know it at the time, but these activities were training him for the
markets.
When a certain superhero was popular, that character’s comic books
would go up in value. A movie release, cartoon, or television show could
cause a bull market in that superhero. This prepared him to see that a hot
product could send a company's stock soaring.
Future record setting expectations for a rookie baseball star set his
cards on an uptrend as long as he met expectations for home runs, batting
average, and RBIs each season, much like earnings expectations drove stock
prices in the market. One bad season could lower the value of the player’s
cards just like a bad earnings announcement could lower a stock’s price.
Rookie cards could make big money if their careers took off, just like small
cap companies in the stock market if their products and earnings took off in
an uptrend. Hall of Fame players' cards stayed about the same, their growth
years being behind them. Everyone knew where the Hall of Famers would
end up, much like most big cap stocks that just meander along at about the
same price with their growth years being behind them.
When he was young, he visited coin shows and made purchases for his
growing collection. Years later, as he sold his coin collection, he learned the
difference between what something was purported to be worth by a book on
prices versus what a buyer was willing to pay for it. There was evidently a
difference in the price of the coins depending on whether he rented a booth
and bought coins from people trying to sell them, or if he went to a coin show
and bought coins as a customer. This taught him about the bid/ask spread in

Show Me Your Options!: The Guide to Complete Confidence for Every Stock and Options Trader Seeking Consistent, Predictable Returns by Steve Burns