9 Options Trading Myths Debunked
There are so many Online Options “Gurus” repeating comments they hear from others who are also misinformed. Unfortunately, this perpetuates untruths and confuses so many investors. Not getting the answers to legitimate and simple questions is bad. However, getting the wrong answer is ten times worse.
I’ve created these videos to help investors understand what is right, what is wrong, and what is misunderstood. Online Option "Gurus" who perpetuate these myths are either lying or don't know what they're talking about. Either way, that's dangerous to the unsuspecting investor simply trying to learn about options.
Options Trading Myth #1
Beginners Get Confused Here
While beginners get confused with the Greeks, it's not the #1 place where everyone gets confused. Believe it or not, almost everyone is confused at the most important part of the decision-making process. I am sure you are as well.
Options Trading Myth #2
You Must Understand the Greeks
If you're trying to learn options, there is a lot of pressure to dig into a formula only a small group of people in the entire world could fully understand. Why has the industry pushed this agenda? Is it even necessary? You'll be surprised.
Options Trading Myth #3
Options Traders are Volatility Traders
This statement is at the core of the confusion facing anyone trying to learn options. And believe it or not, it's the exact opposite of what everyone thinks. Once you understand this, you can accept a different approach to learning options.
Options Trading Myth #4
The Top 1% Trade Iron Condors
This is a huge myth perpetuated by many online "gurus." I am a top expert in the world with extensive experience trading with, for, and against the top investors in the world. I have never seen them trade an Iron Condor. So, what do they trade?
Options Trading Myth #5
For Options Buyers Theta is Your Enemy
Many online "Gurus" make this statement or some version of it. Another way you'll hear it is "I don't like paying the daily decay." Listen up, the Top 1% understand that Theta is part of the game. More importantly, without Theta they can't get what they really want...
Options Trading Myth #6
The Top 1% Buy ITM Options
The Top 1% are very particular when using options. They buy options to receive the leverage embedded in the product. In other words, they're trying to pay the least amount of premium to make the maximum return. The Top 1% buy these options....
Options Trading Myth #7
IV Determines "Cheap" or "Expensive"
This is a core concept you will find in traditional options education. It's the only solution offered to investors regarding the relative value of an option. And it causes great confusion! So, if it's not IV (Implied Volatility), then what's the answer?
Options Trading Myth #8
Buy for $1, Sell at $10. Great Trade!
Maybe not. While it's true that you want to make the most money when you buy an option, you shouldn't judge a trade by the results. How you make the profit is important. Somewhere between $1 and $10, there's a story...
Options Trading Myth #9
There's a Volatility Edge Selling Options
This is one of those statements repeatedly made by fake experts. It's not true, nor will it ever be. I understand the argument made, but it lacks a fundamental understanding of the risk factor inherent in options.