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The Available Options Education Focuses on The Greeks & Implied Volatility ... It's Not Necessary!
What is Necessary?
Getting Simple Answers!
When Do I Use Options?
Which Option do I Buy?
Get the Answers to the Two Most Important Questions.
You Won't Find These Answers Anywhere Else.
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by over 7,000 attendees
00:16 2 Questions You Can't Answer
04:34 The Education IS the Problem
08:21 The Advantages of the Top 1%
12:21 The Sharks Crave This!
14:48 Guess and You Will Lose
19:45 35 to 1 Payouts
21:43 The Greeks & IV Don't Matter
26:46 The GameChanger
32:54 Finding Great Trading Ideas
37:04 Incredible Results
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How the Top 1% Trades Options
& Why the Greeks Don't Matter
Intro: 2 Options Questions You Can't Answer (00:16)
My name is Felix Frey and I am the founder and creator of OptionsGeek.com. First, I want to thank Benzinga for the invitation. I’m very honored to be here.
Let me start by telling you that there is no better time for you to be in the options game than right now. Over the last 25 years, Volumes have increased dramatically and continue to increase.
The power of Options is no longer a secret.
And through advancements in technology, trading options has become incredibly easy and accessible to all investors. As a result, millions of new investors are looking at options and trying to understand how to use them to gain an advantage.
HERE ARE THE PROBLEMS
- With the available options education, it can take an enormous amount of time to learn what the education is trying to teach you.
- The focus on the Black-Scholes formula, the Greeks and Implied Volatility is too difficult for the average investor to understand. And may not even be necessary.
- The most important options tool, the options chain, is too complex, intimidating, and confusing.
- Finally, the Options strategies taught are too difficult to understand and not practical for most investors.
As a result, the average investor trying to trade options is left at a disadvantage.
Even worse, there are 10x more investors that don’t use options because they’re confused. And rightfully so.
Think about this incredible statement…
With millions of investors trading options, how is it possible that 99% of them, even the experts, can’t answer these 2 questions and prove that their answers are right?
#1 When do I use options?
#2 And which option do I buy?
Millions of options users are guessing at these questions.
What’s shocking is that the industry doesn’t offer a clear answer. This is at the heart of why investors lose money trading options.
And, let me be clear, there is no available options education that provides those answers.
Now, let me ask you…
- What if you could understand how the top 1% trade options in a short amount of time?
- What if options didn’t have to be complicated?
- Imagine not having to study the Greeks and Implied Volatility?
- What if you knew the strategies used by the Top 1% of investors?
- Wouldn’t that give you more confidence in your approach?
- Now think about how clear options would be if you finally learned how to answer those 2 options questions that 99% of investors guess at? When do I use options, and, which option do I buy?
- Better yet, what if you had access to a tool that gives you those answers, so you could avoid analyzing options altogether?
- If it was that easy, imagine how many new stock investors would start to use options.
A useful Tool would be a game changer and it would open the door to all investors!
The tool would tell everyone when to use options, AND then tell them which option to buy. Now THAT would be something special. And that’s what I’ll show you today.
In this webinar:
But before showing you all of that, let me tell you a little bit about myself…
After graduating the Wharton School in 1995, I joined Swiss Bank O’Connor. O’Connor was one of the best Options Trading Firms in the business. They had the Best Options Training Program on Wall Street.
And that’s where I learned options.
A few years later, I was recruited to go work for Bank of America. It was here that I advised and traded against the biggest money managers in the world. Names like George Soros, Warren Buffett, Steve Cohen, Bill Ackman, and Carl Icahn just to name a few.
I then switched sides and joined a very prestigious Hedge Fund, Scoggin Capital Management, where I had the privilege to get a seat next to two of the most successful Hedge Fund managers over the last 30 years.
So, when I make a big statement downplaying the Black-Scholes formula, the Greeks, and Implied volatility, I know exactly what I’m saying.
I don’t take it lightly. And I would never make a comment like that if I couldn’t prove it.
Let’s get started.
The Education IS the Problem (04:34)
I am out there highlighting a major flaw in Options Education.
Not that it’s wrong. And not that it has bad intentions.
It’s simply misdirected.
Now, I’m going to spend a couple of minutes revealing it to you because seeing this major flaw will help you accept that what I’m saying is the truth.
First, let me explain that there are two very distinct types of options traders. You can be a Volatility Trader or you can be a Directional Leverage Trader.
Volatility traders focus on the Black-Scholes formula, the Greeks, and Implied Volatility. They actively trade to remain neutral on the directional risk of the underlying asset. This means they are not profiting on where the stock goes. They profit on how the stock moves.
Now, Directional Leverage Traders are generally using options to profit from the directional movement or lack of movement in the underlying asset. Profits mainly come from where the stock goes.
Again, two very different types of traders that profit in very specific ways.
Now, this is a layout of every equity options trader/or investor in the world. It’s not drawn to scale, but I think you’ll get the point.
Over here you have the options exchanges, where you’ll find the market makers, next to them are the investment banks, and here you have the large institutional customers of the investment banks.
Within that area there is a group called Hedge Funds.
In this large area, there are millions of individuals trading options with the various online brokerage apps. They are called retail traders.
Now, I want to highlight the volatility traders first. They are the market makers, the investment banks, and a very small group of traders within the hedge fund community. Ken Griffin at the hedge fund, Citadel, is a famous Volatility Trader. But, in fact, less than 10% of Hedge Fund traders are Volatility traders.
Most Hedge Fund traders that use options are Directional Leverage Traders.
The big names you hear about in the news like Carl Icahn, Steve Cohen, George Soros, Bill Ackman, Dan Loeb, John Paulson, etc. etc. are all Directional Leverage Traders.
Which leads me to the Retail Trader. I would guess 99% or more of retail options traders are also Directional Leverage Traders.
Now, here’s the kicker...
The available Options Education that teaches the industry was created by Market Makers and to this day is sponsored by market makers, the Investment Banks and the few Hedge Funds that all trade Volatility.
You see the mismatch there????
Volatility traders, who profit with the Black-Sholes formula and who trade very differently from the retail trader, created, teach, and continue to support the available Options Education.
Look, if you want to get a job at Goldman Sachs, Bank of America, JP Morgan or at the Hedge Fund Citadel then you need to know the Black-Scholes formula, the Greeks, and Implied Volatility like the back of your hand. The existing education they created would fit perfectly.
But, if you don’t and it’s likely you don’t, then you want to trade more like these very specific hedge funds that trade Directional Leverage. I call these hedge funds the Top 1%, or the Sharks.
Unfortunately, there is no options education out there that teaches you how they think.
Options education never evolved to meet the needs of the new investor, which is YOU.
This mismatch is the Options Industry’s fundamental flaw that I am trying to fix with new education at OptionsGeek.com that targets the average investor. And focuses on how the Sharks use options.
Now, it’s important to know from the start that the Sharks BUY options to gain leverage. And they do it in a very specific way. Let’s start by highlighting where the Sharks gain their advantage.
The Advantages of the Top 1% (08:21)
There’s one Basic Assumption you must make about the Sharks.
They know what they’re doing.
They may not always get the direction right, but they always give themselves an advantage.
I call the Top 1% “masters of risk reward.” What do I mean by that?
Let’s take a look…
The Top 1% are able to recognize when to use options and when not to use options by weighing the risk reward profiles of each trade idea. They are keenly aware that sometimes you use options and sometimes you don’t.
Not every trading idea is an options idea.
Let me repeat that…
Not every trading idea is an options idea.
Take a look at this diagram I made to illustrate this point. It shows you exactly where the Top 1% gain their advantage or gain their edge.
The first place where the Top 1% gains their edge is in the Stock Idea. They can use fundamental analysis, technical analysis, Quantitative analysis, data gathering, or any combination of these techniques.
Once they get the Trade Idea and analyze the possible outcomes, they need to make a choice. Do they invest in stock or options?
This decision and how they make this decision is the second area where the Top 1% gain their Edge. But it doesn’t stop there.
Once they decide that their trade is an Options Idea, then they must choose the option they want to buy. And that’s where they head to the Options Chain and make sense of what they see.
Choosing the Right Option is one of the most well-kept secrets on Wall Street.
Most people don’t even know that there’s a process to it. Which means that most people don’t use a process that they can defend or explain why that’s the right process.
Even the experts!
Why do you think most, if not all experts, shy away from giving you a clear answer?
Just ask them.
See what they say.
Be prepared to be confused or to hear an answer that can’t be proved.
You see, the Top 1% are very specific right here. Knowing which option to buy and then understanding how that option is working to give you an advantage is the Options Secret.
And I’ll show you how they do it in just a minute.
The fourth place where the Top 1% gains their edge is in the Trading Plan. They have a process and the use a Plan to execute that process.
When using options, the Trading Plan is just as important as the Trading ideas.
Now, let’s narrow our focus for a moment…
I’d like to take this area in the diagram and show you what I mean, so you don’t doubt what I am saying.
Here’s Steve Cohen, he’s made more than $13Bn on Wall Street and is considered one of the best traders ever.
These are his top 48 stock positions in his portfolio as of March 31st , 2019
Of Steve Cohen's Top 10 Positions, 8 have options positions.
Below that we see very few. In fact, of the next 38 positions, only 3 use options.
The first takeaway should be clear.
Some positions use options, and some don’t.
So, like I said earlier… Not every Stock idea is an Options idea.
The question you should then ask is:
Why or how does he choose to use options on certain positions and not others?
Which leaves us with the next obvious question:
Of all the potential strikes and options, how does he choose the right one?
Again, this is the Options Secret.
Now, the simple answer is that he chooses the one that gives him an advantage. He chooses the one that “shifts the odds in his favor.”
The problem is no one explains specifically what this means.
So, if we can answer these 2 questions then we can actually approach the investment process, just like Steve Cohen and every other Shark playing this game.
Now, let’s get into some details…
Sharks Crave This! (12:21)
We know that the Sharks buy options.
We know that they are Masters of Risk Reward, which means that they only invest in options when they have an advantage.
Now, let’s make it clear why the Sharks buy options and which ones they buy.
The Sharks are looking for asymmetric payouts that are in their favor.
What does that mean?
Let’s take a look…
Options offer asymmetric payouts.
When buying options, your max loss is limited while your maximum gain is unlimited.
When Selling options, your max loss is unlimited while your maximum gain is limited.
Symmetric would look like this. (Even potential gains vs potential losses)
Asymmetric looks like this. (Uneven potential gains vs potential losses)
The Sharks want the asymmetric payout that Buying options offer. And add this…
They keep it simple. Most of the time, they buy puts or buy calls.
Now, the questions is: What causes this Asymmetry?
The answer is Leverage.
Leverage is the ability to take $1 and turn into $3, 4 or $5.
Embedded in an Option is leverage with limited liability.
That’s what the sharks crave.
That’s what they want ONLY when they find opportunity to take it.
So, which options do they buy?
Sharks buy OTM options.
Now, I’ll get to specifics on choosing the right one, in just a moment. But first, let me give you an analogy that makes sense…
The Sharks want to play options like Wayne Gretzky played Hockey.
Wayne Gretzky wasn’t the biggest, strongest, or fastest Hockey player.
Yet he’s considered one of, if not, the best that has played the game.
Wayne Gretzky once said:
“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”
The Sharks think about the stock as the puck.
They think about where the stock is going to be.
They then look to buy options BETWEEN the stock and their target stock price.
Why do they do this?
It gives them the most leverage at the cheapest cost.
And here’s something important…
The Sharks target 150-400% returns.
They’re not looking for 50% returns, or options that go from $1 to $1.50. That’s not in their range.
They are looking for situations where $1 has the potential to become $3-4- 5 or even $10.
That’s what they want!
That’s why they play!!
Now, let me tie things up by showing you how they think about choosing the right option to buy.
Guess and You Will Lose (14:48)
First, we’re going to have to agree on one thing here:
Options are a probability game. And the Sharks treat it as a Probability game.
In any probability game, you want to reduce the number of guesses that you have to make.
The more guesses, the more chance for error.
Let me explain with an example…
In solving a problem, assume that you need to guess right at 3 different variables to reach the right answer. Also assume the variables have 3 possible outcomes. That means, you have a 33% chance to be right on each variable, or 1/3.
So, here are the calculations of guessing correctly on the first variable and each additional variable:
Here’s the 1st Variable: 1 out of 3 or 1/3 which = 33% chance of being right.
The calculation for guessing on 2 Variables is:
1/3 x 1/3 = 1/9 or about an 11% chance of being right on both.
If you’re going to guess 3x, then the calculations on 3 variables is 1/3 x 1/3 x 1/3 or 1/27.
This is only a 4% chance of being right on all three guesses.
Just adding a couple of extra guesses drops your chances of being right by 90%, from 33% to 4%!
This is why you want to minimize your guesses, or guess-timates, whenever you can.
And this is exactly what the Top 1% do with options.
They reduce the amount of guesses they take to give them a better chance to be right and profitable.
So, what are the possible guesses?
When trading options most people are thinking about:
- Where the stock will go.
- They’re thinking about timing.
- The available options education has them thinking about Implied Volatility.
Maybe add in all the greeks?
There’s 5 of them. So, they try to figure out where they’ll be in the future or how they’ll move, when the stock moves or time goes by. Some investors even try to guess at what the Options price should be worth right now.
For example, they’ll say…
“Well, I see the option is trading at $2.00, but according to my calculations the option should be worth $1.50.”
Those calculations, as thorough as the research and analysis may be, are still a guess. Remember, more guesses equal a greater chance of being wrong.
The Top 1% keep it simple.
They guess once.
Their guess is the Target Stock Price. And like I showed you before they are allocating enormous resources to make that guess a very good guess.
They don’t guess on time when using options. The Top 1% are laser focused on an event that could move the stock. This is important.
And they believe that this event, whatever it may be, will move the stock to their Target Stock Price.
Do they guess on the Greeks or Implied Volatility?
No. It’s almost impossible to guess where the Greeks will be at any given price in the future. It’s not worth the time.
And as I will prove to you shortly, Implied Volatility and the Implied Crush isn’t going to matter much either if their only guess, the Target Stock Price, is correct.
Lastly, they are certainly not guessing on what the option should be worth right now… because the Top 1% live in reality. The option is worth what you see on your screen. It’s worth what someone is willing to pay for it regardless of what any model says, including the Black-Sholes model.
They put all of their focus on the Target Stock Price and the event that will move the stock in that direction.
Now, here’s the secret…
The Top 1% like to do their analysis with the knowns and not the unknowns.
What does this mean?
Well, there are only 2 things that the Top 1% and you are 100% sure of today. And the Top 1% want to base the majority of their decision on these two certainties.
The first, is, as we just discussed, today’s options price.
That is certain.
If they buy the option, they will pay that price.
The second is what the option is worth at a minimum when their target stock price is hit in the future.
They don’t know for sure what it’ll be worth, but they will know the minimum price.
That minimum price is called parity.
By comparing, what the option is worth today and what it will be worth at a minimum in the future when their target stock price is hit, helps them determine
the risk-reward in the trade.
This is the risk, and this is the reward.
They then have to figure out if the reward outweighs the risk.
Well not so fast. Let me switch gears for a second…
35 to 1 Payouts (19:45)
If I told you that I had an idea where you could make 35 to 1 on your money, meaning that for every $1 you could make $35, would you risk your $1?
I won’t put you on the spot, but most people say yes.
Let’s assume that you say yes.
Now let me transport you…
If I brought you to Las Vegas, right up to a roulette table, and told you to pick a number because if the spinning ball hits your number then you win $35 x whatever your bet is, then what would you say?
Probably something like… “I don’t want to play that game.” Right?
“The odds are against me. The Casino always wins.”
And you’d be right.
You don’t want to play roulette to make money.
The odds ARE against you.
Which means you’re not getting paid enough for your $1 bet.
But now let’s look at an example with any stock…
Assume XYZ is $100 and the $105 Calls are $1.
And you think the Calls will be worth $5. That’s a 4 to 1 payout. You pay $1 to make $4.
You might like that trade. But here’s the question I want you to ask yourself every time you trade:
Is 4 to 1 good enough to make that Options trade?
Or whatever the potential payout you’re looking at…
Is it good enough to make that trade?
You see, just like in roulette, the payout doesn’t determine how good or bad a trade is.
35 to 1 looked great, but the minute I told you it was Roulette you knew it wasn’t good. Why?
Because, there’s another part to assessing the risk reward...
And that’s what the education at OptionsGeek teaches you. How to understand whether or not an option is good for you given your view on the stock.
Keep in mind that several options may offer you attractive payouts.
So, you’ll also learn how to figure out which one is the best option for you.
And you’ll learn how to prove it!
The Greeks & IV Don't Matter (21:43)
After I show you the calculations and the process, I wanted to make it even easier for everyone, so I spent time building a tool that gives you the answers you need. And better yet, it’s simple to use and understand.
I’ll walk you through that tool in just a moment.
But before I do that, I want to address the elephant in the room.
How could I say the Black-Scholes formula, the Greeks and Implied Volatility don’t matter?
Well… let me explain.
The Black-Scholes formula is clearly an important financial model. From this model we get the concepts commonly known as the Greeks and Implied Volatility.
These concepts are the backbone of the Options Industry’s Educational process.
Now, I know making these statements that you don’t have to understand the Black Scholes formula, the Greeks or Implied Volatility causes people to take pause.
Some people even get angry at me.
So, I thought maybe I could get you to listen to a familiar voice.
Here’s Warren Buffett:
"Ya, we…. Charlie and I, have thought about options all I life. I mean, my guess, is that Charlie was thinking about that in grade school. And, uh, you know, you have to understand… You DON’T have to understand Black-Scholes AT ALL. But you have to understand the utility... uh, and in a general sense the value of options." - Warren Buffett
You won’t hear the Options Industry play that sound byte too often.
Warren Buffett very clearly states that you don’t have to know anything about the Black-Scholes formula.
But, like everything else I do, let me try to prove it to you…
First, let’s start with Implied Volatility.
People get caught up looking at Implied Volatility to see whether or not an option is cheap enough to buy. They’re missing the point.
If you want to trade like the Top 1%, then an option is cheap when you consider where the option is going relative to what you’re paying for it.
Think about our example where the option premium was $1.00 and I think it’s going to $5. If you told me that the volatility was 20% or 50% or 100% or whatever would it change my mind?
Regardless, of what Implied volatility you tell me, the option is still $1.00. And I still think it’s going to $5 at expiration. Nothing has changed in my risk reward assessment.
The Implied Volatility doesn’t change anything.
And that’s why it isn’t the focus.
Your focus should be the Option’s Price you pay and your Target Stock Price which determines the Future Options price you need to evaluate!
Now, let me briefly explain why the Greeks don’t matter for the Top 1%.
Here we go…
An option is made up of two parts: Intrinsic Value (sometimes called “parity”) and Time Value.
Intrinsic value is the part of the option that represents how much of the stock is built into that option, the ITM part.
Time Value will be everything else.
The Greeks and Implied Volatility only affect the Time Value of an option.
Now, Sharks buy OTM options.
OTM options are made up of all Time Value.
We stated that the Sharks base their decision on what the Option is worth today and what it will be worth, at a minimum, in the future given their Target Stock Price. That future price dictates the ITM Part of the options or intrinsic value.
Depending when the option reaches the Target Stock Price will determine some level of Time Value.
But, I want you to make sure you see and understand this.
As the stock moves higher, toward the Target Stock Price, notice what happens to the option.
I’m showing you different time intervals in pictures here.
The Time Value of the option goes lower while the Intrinsic Value of the option rises. By the time, you get to your Target Stock Price, the Intrinsic Value makes up most of the value of the option. Time Value is a meaningless part.
In our example, Intrinsic Value may be $0 here. But, $5 here. (See picture above)
Time Value was $1 here, but maybe $0.05-$0.10 here.
Remember, the Greeks are inside this Time Value box.
So, as you can see, the Time Value box is not going to matter if you hit your Target Stock Price.
Now people ask… “Ya but what if you don’t hit your target?”
If you don’t hit your target stock price, the option will be worth what the market says it’s worth and you should focus more on why you were wrong with the Target Stock Price and less on why the option didn’t make you as much money as you thought it would.
The process is very specific.
Focus on today’s option price, your Target Stock Price which determines the Future Option Price, and then evaluate whether or not that payout is worth the risk.
Get that right and the Greeks don’t matter.
Now let’s introduce the new tool I built and look at some real examples.
The GameChanger (26:46)
I’ve identified for you the two options questions that make up the Options Secret, known only to the Top 1% in the world.
#1 When do I use options?
#2 And which option do I buy?
You’ve learned that the Top 1% use options:
- When they have isolated an event that will move their stock.
- When they have high confidence in their Target Stock Price; and,
- When the OTM options offer them great risk reward, that shifts the odds in their favor.
You’ve learned that they choose an option by:
- Focusing on the price of the option…
- And by focusing on what the option will be worth when their target stock price is reached.
- They then analyze the risk reward of each strike to determine which one (if any) is the best option that gives them the best risk-adjusted returns.
My education walks you through more of those final details.
But education, even great education, only becomes special if you can find a way to use it. If you can find a way to make it practical.
So, I set out to bring my education to life.
I started at the most important Options Tool – The Options Chain.
Everyone uses the Options Chain. It contains the options prices available for you to trade. Which clearly, makes it an important part of the trading process.
And it’s right here where everyone gets confused and then guesses at the strike they want to use.
But it’s not their fault. The Options Chain doesn’t give you the information you need.
That’s why I created the New Options Chain.
An interactive Options Chain that gives you a simple answer and leaves out all of the hard work needed to analyze the data yourself. This means, once you understand the concepts that I provide in the education, then the Tool does all of the work for you.
All you have to do is give it exactly what is expected from you when buying options.
#1 Expiration Date.
#2 Target Stock Price.
#3 Confidence Level.
Give it those 3 things and it gives you a solution with a simple answer.
Now, let me show you an example.
Look at Disney…
They announced Positive news on their Disney+ subscriber base.
- Is that a signal to buy calls?
- Or is that just a small bit of positive news within a deteriorating economic outlook for the consumer over the next 18 months?
- How are you thinking about this Covid-19 virus in your analysis?
- Can earnings be normalized going forward?
- The stock went from $140 to $80, now back through $100. Where does it go next?
- And how long will it take to get there?
These are all questions you would ask yourself when analyzing Disney.
Just because you think it’s going higher or lower is not good enough when trading options. You have to be more specific with:
- An Expiration Date
- A Target Stock Price
- And a Confidence Level
Let’s assume we think DIS is going lower. That the consumer won’t rebound as fast as people think and DIS will suffer for it. Your analysis points to a retest and a break of the lows, possibly reaching $70. You think earnings will be the catalyst. And you are very confident in your analysis.
Now, remember, once you have your idea, you are here.
Your next step would be to look at an options chain and start the options analysis.
The New Options Chain is going to quickly complete this part for you.
So, I pulled up June Expiration, which allows you to see their next earnings announcement.
We’ll use the default of 80 as a confidence level.
And let’s plug in $75 as your Target Stock Price.
You see the pointer pop up at the $97.50 Put.
The New Options Chain is saying that giving your view, and after making all the calculations for every strike, this put option offers you the best risk reward.
It’s also in this unshaded area, which happens to be where the Sharks look for opportunity.
But what if you moved the Target to $70?
The tool quickly recalibrates the risk reward and now finds that the $95 Put is better.
But you kept the same confidence level.
Perhaps, we want to lower that confidence a bit to 70%.
The New Options Chain recalibrates and returns you back to the $97.50 Put.
By landing the pointer within the unshaded area, you have found an opportunity to trade options that shifts the risk reward in your favor. And you should buy the $97.50 Put to capture that.
It’s that simple.
In 3 Steps to Profit, I help you better understand exactly how the machine is evaluating the risk-reward.
Listen, the New Options Chain allows you to focus on what’s most important, the Target Stock Price. Remember, you only want to take one guess. Then let the computer do all the calculations.
Here’s another way to think about it…
The market has offered you their view, which is embedded in these options prices.
The New Options Chain is telling you whether your view gives you an opportunity to buy options.
Now, if you’re just guessing at the Stock Idea and guessing at the choice of option then maybe it might be better to head over to that Roulette table we left a little while ago. At least you can get a 35 to 1 payout there.
I explain all of this and much more in my education.
Now that you’ve seen how easy I made it for everyone to use options just like the Top 1% in the world, you probably have 2 main questions.
The first, is about the Confidence Bar.
“How do we determine our confidence?”
Let’s go back to Steve Cohen’s portfolio.
Remember the options trades he took?
They were bunched up near his top positions.
As you can imagine, he is most confident about the potential reward in his top positions.
That’s WHY they’re his top positions.
So, think about confidence as the confidence you have in your assessment of where the stock will be.
As we discussed, the Top 1% don’t want to guess too much. They want to play options when they are most certain about their Target Stock Price.
I want you to follow their lead.
Now, the second question revolves around the Target Stock Price, more specifically, the question is: How do you get a Target Stock Price?
Everyone has their own unique way of looking at the market.
Technical analysis combined with Fundamental analysis seems to work very well with Options Trading.
What also works well is analyzing Unusual Options Activity.
And you might be surprised how Unusual Options Activity can give you a Target Stock Price.
Let’s talk more about finding the best risk reward trading ideas in the market with Unusual Options Activity and I’ll show you some results.
Finding Great Trading Ideas (32:54)
Without a doubt, there’s enormous value that you can find in Unusual Options Activity.
The thinking is that large Hedge Funds, the Smart Money, have an information advantage versus the average investor. So, obviously, it would be great to see the stocks they’re trading at the moment they’re trading them.
It would be even better if we could get more detailed information about their idea.
Tracking large options trades, or Unusual Options Activity, can give you a lot of that information. Besides direction, it also offers timing.
Now, there are many people and websites feeding you this information. The issue is that there are so many trades to follow.
On any given day there might be 200 unusual options trades. Are you going to trade every single one? Of course not.
So, how do you choose?
This is the problem most traders face when looking at Unusual Options Activity.
With so many trades each day, how do you filter them to find 1 idea that you could trade?
It’s not practical for you to take 20 different trades per day.
Then if you try to filter them, what should you be looking for and why?
Well, since we’re looking for the Sharks then we know that they buy options.
But let me ask you: How do you determine that they actually bought the option?
Are you sure that they bought the option?
More importantly, most people don’t understand that there’s more to the story than just a large print.
There is a whole process that happens before you see the actual trade.
Starting from at the Hedge Fund to the trade with the Investment Bank.
While I am an expert at options and analyzing the data, me being an expert here gives me more experience than most people.
At OptionsGeek.com, I’ve translated that experience to give you a step by step process to filter, analyze, and understand the Unusual Options Activity puzzle.
Remember, all you see is the UOA. I am trying to explain to you everything else.
Now, just to give you an example of something different that separates me from the rest of the pack looking at Unusual Options Activity, let me show you this...
One of the most coveted pieces of information you want when you look at Unusual Options Activity is the Hedge Funds Target Stock Price. Where does he think the stock is going?
You won’t find that online either or in any book?
You probably didn’t even know you might be able to get close to that answer. But you can!
Let me show you something…
The Tool I built, the New Options Chain, is a 2-way function. What does that mean?
Well, it simply means we can input information one way to get an answer. But, we can also input the answer to get back the information.
Do you see where I am going with this?
I’ve created a tool that thinks exactly like a Hedge Fund Manager.
We need to input the Target Stock Price, Expiration, and Confidence level.
We receive the right Options Strike.
So, if we gave the Tool the Options Strike, then we could back out the Target Stock Price with some certainty.
Essentially, we are backing out the Target Stock Price that the Hedge Fund is looking at using the Options Tool.
Now, that’s valuable!
And that’s just the start of it.
You see, the Sharks trade a certain way. Their trades have a certain DNA. In my step by step process I try to help you find the clues that make up a “Shark Trade” so you can do your best to verify the Right trades.
Remember, the Sharks trade options using the least number of guesses in order to give themselves a better chance to profit.
We want to make the least number of guesses trying to follow them.
So, where to find the data?
How to filter the data?
How to analyze the data?
Backing out the Target Stock Price.
And specifically, what clues you should be looking for to find the best Unusual Activity Trades is all in my education at OptionsGeek.com
But I don’t just explain how to look at Unusual Options Activity, I also show you how to do it.
Each week, I give 2 to 4 high probability great risk-reward trade ideas for my members to follow. Over the last year, the results have been fantastic.
Let me explain a little more about these Trading ideas and show you some results.
Incredible Results (37:04)
Let’s quickly review…
- So far you learned why the available options education is flawed.
- You learned how the Top 1% think about options and why they buy them.
- We’ve gone into how they think about choosing the right option but I left the last part for you in my education.
- I’ve shown you the Tool I made which makes everything simple and allows you to focus on your trading idea. This removes the guesswork with options.
- We then walked through Unusual Options Activity and the trading ideas.
I think you’ll find value in better understanding how that game is played, which leads me to OptionsGeek.com.
There are 3 main parts to OptionsGeek.
There is the Options Education which I call “3 Steps to Profit.” It includes a full course. 50+ videos with Q&A. About 12 hours of material. It was built to quickly take a beginner to an investor that could use options to profit.
So, if you liked this webinar, and the way I take theory to practice, then you’ll love the complete education.
Second, there’s the New Options Chain which takes away all of the analysis and all of the guesswork. It makes options simple for everyone to understand and finally opens the door to the millions of people looking to trade options.
The New Options Chain is a gamechanger in the industry.
It answers the 2 toughest questions in options that you no longer can ignore.
#1 When do I use options?
#2 And which option do I buy?
These 2 questions are confusing everyone. Now, you finally get the answers.
And those answers are one of Wall Street’s best kept secrets.
Last but not least, there are the Trading Ideas which I call Winning Picks.
Winning Picks is a monthly or Annual service that offers you great risk reward trading ideas which are easy for you to trade. The service also lays out a risk management plan that you could understand. The results speak for themselves.
Let’s take a look…
Each week, I give my Premium members 2- 4 trading ideas.
Here are the Trading Ideas - Results by month using the same $ amount on each trade with a simple stop-loss and exit strategy I teach as part of the service.
Note: These are not actual results by any one member. It is an illustration of equal investments in each trade idea offered. Results are not compounded returns. Trades are consistently rolling off, whether winners or losers, and then placed in new trades. Stop-losses of 50% and staggered positive exits are put in place by each individual at his own discretion. The Program offers several different possible strategies and teaches you how to determine which levels best suit you. Ultimately, that decision is left to the Member. All past trades are documented and presented to all Members in the Members Area. Almost all trades are presented to Members prior to the market open to give each Member equal chance to execute from the same starting point. Results vary according to the members own plan relating to their entry and exit strategy. Past results are not indicative of future performance.
Within the Month of March, I used March 13th as the starting point because, while my service was live before that, I made my first live public presentation on stage at the NY Trader Expo.
If you download the book I attached to this presentation, you will see every trade we took in the last year. They include winners and, of course, the losers. Or you can go to OptionsGeek.com and become a Free Member where you can also see the results there as well.
It’s important to state upfront:
- We do not buy the low.
- We do not sell the high.
- And we certainly don’t ride the options to zero.
- We simply try to capture the middle.
- We also lose more times than we win.
- But when we win, we win big.
You’ll see in the results there are many trades with triple digit returns, and a few 1,000 to over 2,000% winners.
Let me show you some specifics.
This is an example of a weekly update you’ll receive. I chose February during the Covid-19 crash.
You’ll notice here that Red shading is for Puts and Green shading is for Calls. I try to have both calls and puts on at the same time to keep a balance.
The average maturity is 2 months. Holding periods have been as short as 1 week.
Listen, it’s not a fast service trying to win right now on any particular trade. We are using a methodical approach and I have set it up like a probability game with rules that are easy to follow.
I try to stay away from ETF’s or indices. Mainly because it’s hard to have edge on a whole sector.
We mainly trade options on equities.
And remember, we are using my experience to find the right Unusual Options Activity trades that piggybacks the Edge obtained by the Hedge Fund on a specific company.
Now, I package:
- The Education; and,
- The Tool together for a One-time payment to make it affordable for everyone.
- In addition to your purchase of 3 Steps to Profit, I also offer you a 1 Month Free trial to the Winning Picks product. Even if you don’t trade my ideas, they are incredibly valuable as an educational supplement.
So, that’s my experience 25 years on Wall Street translated into a neat package with lifetime membership to the Education, Lifetime access to the tool, and 1 free month of Winning Picks priced at the cost of 1 hour (if you’re lucky) for a NYC lawyer.
I think that’s reasonable.
This is a can’t miss opportunity to start thinking, trading, and profiting like the Top 1% in the world.
And remember, I gave a similar (but live on stage) presentation like this in New York just over a 1 year ago. People in that audience who joined months later were kicking themselves for not coming on board in March.
So, believe me, the only problem you’ll have is dealing with the fact that you didn’t start sooner.
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