How to Make Money With Options
Learn How the Top 1% Trade & Profit With Them!
The Warning Heard by the Top 1%
This incredible video will not only show you how to make money with options, it teaches you how the Top 1% use them to gain an advantage. You'll also learn the specific signal that guides the Top 1% on when to mitigate risk in their portfolios. And finally, how you can create "optionality"... without even trading options!
>>> TRANSCRIPT BELOW
The Best Way To Learn Options Trading
Learn How the Top 1% Trade Options ... and Profit With Them!
The Warning Heard by the Top 1%
The best way to learn options trading is to better understand how the Top 1% of investors trade and profit with them. Using a real example, this video shows you how the top investors use options to mitigate risk in their portfolios. It highlights a specific signal they look for to guide them in that process. And illustrates the decisions they make when using options that gives them an advantage. It also reveals how active traders can create "optionality"... without even trading options!
>>> TRANSCRIPT BELOW
The Warning Heard By the Top 1%
Have you ever wondered how the biggest and smartest investors always seem to end up making all the money?
It’s certainly not by luck.
The smartest investors on the planet, the Top 1%, win by using one of Wall Street’s most closely guarded secrets. In fact, they even go to great lengths to divert the general public away from this secret.
But like the old saying goes: You have to watch what they do and NOT what they say.
So, here’s what I’m going to do…
For the first time ever, in this video, I’ll reveal this closely guarded secret that will have you thinking and investing like the Top 1% in the world. This has NEVER been made public before, so you absolutely don’t want to miss this!
Where We Are Right Now
Let me take a few minutes to set the stage…
Over the last 12 years, the market has seen incredible periods of volatility.
Both high and low volatility! From nirvana in the housing bubble, to a crash, to imminent bankruptcy(?), to one of the greatest stock market bull runs of any period on Wall Street.
This great Bull Market owes a lot of credit to the largest Governments around the world. What do I mean?
At the very lows of the market in 2009, the world’s bond market was imploding. To save the economy, Governments began supporting the Bond market by printing money on an unprecedented scale.
It’s been the largest financial experiment in the history of finance for the last 10 years. And now, we’re entering the period where that experiment has to unwind. EVERY active investor already knows this.
But there’s been a warning shot recently issued in the market, that perhaps is less clear. The S&P 500 Volatility Index, or the VIX, recently made a startling move higher.
Many people know the VIX as a “fear” gauge. And when investors think “fear”, they tend to think of crashes. This thinking is what separates most people from the Top 1% in the world. You see, Volatility is not just a measure of a potential crash. It’s a measure of Risk, both up and down.
When you get a spike in the VIX index like the one we saw earlier this year, that’s a warning sign. And when that warning sign comes at such a momentous time in our history, where the Federal Reserve will try to steer a smooth landing, the Top 1% perk up and listen to what the market is telling them.
Ray Dalio is one of the smartest investors. He founded Bridgewater Associates, the largest Hedge Fund in the world. Listen to their thoughts on the economy:
"2019 is setting up to be a dangerous year as the fiscal stimulus rolls off while the impact of the Fed's tightening will be peaking."
But then they add,
"for investors, the danger is already here."
When the VIX spikes higher, the message is simple:
- Risk has gone up;
- You should invest more carefully; and,
- Give yourself greater room for error.
What You Will Learn
That’s what I’m going to show you over the next few minutes. In this video, you’ll hear 4 important points:
- What the Top 1% look for every day before making their decisions.
- ONE PRODUCT used by the Top 1% that have made them fortunes.
- ONE SIMPLE QUESTION you can’t answer that is preventing you from making incredible gains. And finally,
- I’m going to reveal the ANSWER to that simple question which is going to dramatically change your fortunes and allow you to reach your true potential.
But first, I want to be clear. I have no idea which way the market is going. So, if you’re looking for the answer to that question, you won’t find it here. In fact, I’ll tell you right now. No one knows that answer for sure, not even Ray Dalio.
This video is going to give you other answers and a much different perspective. And it’s going to start by teaching you EXACTLY what transpired during the crash of 2008-2009 so you can truly appreciate the risk inherent in the market at this very moment.
Then, if you stick around, I promise to reveal an investment SECRET that 99.9% of investors either don’t know or don’t fully understand. I guarantee that what I’ll show you has never been made public before, yet it holds the key to unlocking your true potential. More importantly, it will get you thinking and investing like the Top 1% in the world.
Without a doubt, the best way to learn options trading is to better understand how they trade and profit with them.
You don’t want to miss this…
The Great Financial Crisis
Let’s start by thinking about a typical Fortune 500 company.
Fortune 500 companies sell bonds (“debt”) or stock (“equity”) to investors in exchange for capital to run its business. The balance between the two is called the Capital Structure.
The equity portion of the company is reflected in the price of its stock, and specifically in its market capitalization. That’s what most people see and tend to focus on. But that’s not the whole story. In order to get the full picture of a Company, you have to add the debt. Debt, as you know, requires interest payments, which could constrain the company’s growth if they’re too high.
Now, when interest rates go up driving those interest payments higher, that’s when companies with too much debt run into trouble. And when trouble hits, when investors are worried about bankruptcy, there are rules dictating who gets back their investments first.
In other words, there’s a hierarchy in the capital structure. Bonds are higher on the pecking order than Stock. What does this mean?
If the business goes south, then bonds are first to recoup what’s left of the value in the company. This means that if bonds don’t get back 100%, then the equity gets wiped out and the stock goes to $0.
In a nutshell, that’s what almost happened in the 2008-2009 crisis.
Let’s simplify things here a bit because, well, simple is just easier.
Example: World Inc.
Assume that the entire world’s economy is a Company. We’ll call it World, Inc. And World Inc has a Capital Structure, the balance between Bonds and Stock. By some estimates the Global Bond Market is 2x the Global Stock Market Capitalization. In 2016 it looked like this: $127 Trillion vs $67 Trillion.
Now, if World Inc.’s Bonds get into trouble, then World Inc.’s Equity gets in serious trouble. Why is that?
Remember, Bonds get paid back first when investors scream “I want my money back.” This means if World Inc. goes bankrupt then the Stock part is likely worth $0.
Governments Saved the Bonds
So, when the Bond market collapsed in 2008-09 due to a global housing bubble, the Equity market didn’t look like it would survive. Remember seeing all your favorite Big Cap Invincible stocks hitting single digits? Most of your favorite stocks looking like penny stocks?
This is the reason why. Don’t forget that.
As World Inc. was on the brink of collapse, Governments had no choice but to step in. They decided to “print money.” Now most people don’t really understand what this means. The visual is a printing press that is spitting out $100 bills, stuffed in bags, and then airlifted to the people that need it. Almost, but not exactly.
In this case, printing money meant supporting World Inc. by buying bonds. This helped stabilize the Bond market AND erased the thought that World Inc.’s Equity would be wiped out.
The rest is, well, you’ve witnessed it. Bonds did stabilize. The largest governments around the world pumped in Trillions of dollars.
This led to one of the greatest runs in Stock Market history. Up almost 400% since the lows of 2009. World Inc. is back in business and thriving. Or is it?
Here’s where it gets interesting. Really interesting!
How the Top 1% Make Money
This infusion of capital by the governments to save World, Inc. has been the biggest financial experiment in the history of finance. And now… they need to unwind their purchases.
Will it work?
It doesn’t matter what anyone tells you, no one knows whether it will work or not. No one knows if the governments who bought all those bonds to support the market will be able to sell them back out. Honestly, there are very smart investors on both sides of the fence.
I’ll tell you this, though. Just because a Top 1% believes the market is going higher doesn’t mean they are all-in buying stocks. The reverse is also true. If the Top 1% thinks there’s a chance of a crash, it doesn’t mean they’re not invested.
What gets lost in the commotion of who’s right and who’s wrong is HOW the the Top 1% place their bets.
That’s what’s important!
It's About Risk Reward
And here’s another thing, most people think that the Top 1% are right every time. They have resources, money, the know-how, and everything else that can help them find the best ideas before you can.
This is true, but the Top 1% are not right all the time. In fact, they’re wrong a lot.
Believe it or not, the Top 1% may not even be right that much more than you! But they are masters of the Risk Reward concept and that’s what makes all the difference.
To help them manage the Risk Reward in their portfolios, they use one product with a secret trick that I’ll show you later.
What’s the product?
The Top 1% use options!
The Safest Financial Product
Now, maybe you have this preconception about options. That they’re too hard to understand, or even that they’re too risky. And why not?
Warren Buffett made the statement that derivatives (options are derivatives) are Financial Weapons of Mass Destruction, painting options in a toxic light.
First, I’m here to tell you that’s not true. Options are, in fact, the SAFEST PRODUCT you can buy if you understand what you’re doing. Yes! I said the safest. But only if you understand how to use them.
Second, I think it’s pretty ironic for Warren Buffett to make a blanket statement like that, when he is in fact one of the largest users of options EVER!
Yes! Warren Buffett uses options.
So, what does he know about OPTIONS that most people don’t?
You’re going to be shocked when you hear what I’m about to tell you.
Then later on, I promise to teach you how to use options like the Top 1% do in under 2 minutes. I’ve created a proprietary way to simplify the process for everyone to understand.
You will learn how to use options like the BEST IN THE WORLD do it in under two minutes! So please stick around. It’s well worth it. Remember, I guarantee that what I’ll show you has never been made public like this before.
But I’m getting slightly ahead of myself here. Let me first introduce myself.
My Unique Experience With the Top 1%
My name is Felix Frey and I am a derivative expert. I’ve spent the last two decades on Wall Street working with these, so-called “dangerous” products, at some of the top Investment Banks and one prestigious Hedge Fund. My unique career has led me here talking to you. Please let me explain.
Wall Street's Best Training Program
After graduating the Wharton School at the University of Pennsylvania in 1995, I started with Swiss Bank O’Connor in Chicago. O’Connor was the preeminent options trading firm with the best options education program offered on the market.
I was in the Structured Products Group where we created solutions to meet the needs of our clients. A good part of the job was finding clients that would listen and then teaching them about options.
You have to remember, during that time, options weren’t that popular.
Dealing with the Top 1%
But fast forward a few years, when I was working on the Derivatives team at Bank of America, the phone was ringing off the hook. Clients were calling us because they had heard what options could do.
In fact, it was here where our team priced the options Warren Buffett was trading. But it’s not like he was the only smart investors using options. I found myself helping some of the smartest investors on the planet make money using options.
You name any of the best and smartest investors, and it’s highly likely they bought options through us. Top investors and traders like George Soros, Steve Cohen, Ken Griffin, David Einhorn, David Tepper, Dan Loeb, Bill Ackman, David Shaw, and the list goes on.
But listen closely. Those are the best in the business. There were thousands of hedge fund managers during my 10 years on the investment banking side that didn’t know options. In fact, they were asking me for advice.
And here’s the crazy part…
They all asked me the same question. Over and over and over again, the same simple and logical question, which I’ll reveal in a second.
Now, here’s the truth.
The Elusive Options Trading Answer
Here I was, one of the Top Listed Equity Derivative Experts on Wall Street at the time, and you know what? I couldn’t answer the simple OPTIONS question with any confidence. Considered the options expert, I didn’t have the answer to their simple question.
And let me be very clear, I had AN answer. I could talk in circles about options, the math, and the Greeks, which everyone was asking questions about. But, I didn’t have THE answer.
If you think that’s scary, being a top derivative expert and not having the answer to a simple question, think about this. Neither did anyone else in the room. How do I know that?
At the time, it was a strong hunch. But years later, I would simply ask them the simple question.
Why did I wait so long?
I’m never afraid to ask a question when I don’t understand something, unless of course, I could lose my job for asking. On Wall Street, once you get to a certain level – you’re expected to know the answer. You can’t risk asking too many questions because others will start questioning whether or not you belong in the seat.
So, what do you end up with?
Well, in this case, a whole room of professionals unable to answer a simple question.
Then a funny, thing happened.
The Rise of the Retail Options Trader
The options market took off. Options Volumes rose dramatically. Free Options Education was distributed all over the internet. Online Options Brokers set up everywhere. Retail investors started getting into the mix - in a big way! And guess what?
Everyone had the same question. They still have the same question.
Have they gotten an answer?
The Industry Fails to Deliver an Answer
Not one Options Education course, program, conference, tutorial, or book explains how to get the answer. You can’t find it anywhere. How do I know this?
I bought all these books and signed up for all the courses. I raised my hand and asked the question at the conferences. The options expert, me, asking every other expert the simple question. Getting many different answers, and two simple words: “It depends,” without further explanation.
One options trader laughed, “The hardest question in options.”
I’m just bringing it to the forefront so everyone can understand the problem.
Oh, and remember the best options training program that O’Connor offered?
Two weeks after graduating university and just starting to learn about options, I asked that SIMPLE question too. Needless to say, I didn’t get a straight answer there either. And they were the best.
But when you’re on Wall Street, you can’t challenge the best when you’re just learning. You take what they tell you and keep going, which leads me to Scoggin Capital Management.
My Hedge Fund Experience
Scoggin Capital Management was an incredible experience. For almost a decade, I had the privilege to sit next to two of the most successful Hedge Fund managers over the last 30 years.
What amazed me as I sat in that seat?
They KNEW how to answer the simple Options question in a way I had never seen. They used options effortlessly to play certain opportunities and to manage the risks of the portfolio when the time was right.
How did they figure it out?
Masters of Risk-Reward
Well, they were masters of the Risk Reward concept. And I’m not talking about the simple explanation you generally hear as an investment goal:
Greater Risk means Greater Reward, where your goal is to find trades with the least amount of risk and greatest reward.
Conceptually, that’s easy to understand. I’m talking about how and when to actually use options. Using a process that maximizes your Reward while at the same time, minimizes your Risk.
Options are the perfect tool for the Top 1% to masterfully achieve the best Risk Reward. You see, embedded in an option is a distinct feature - limited liability.
Add that to unlimited opportunity and you create a payout profile that looks like this when you buy an option:
Limited Liability, and Unlimited opportunity! It looks a lot like the GOAL of every investor, right?
Indeed, options are the safest investment product you can use ONLY if you understand what you’re doing! This means knowing the answer to the SIMPLE Options question, which unfortunately, isn’t known outside this small group of investors.
Now, as promised, I’m going to show you that Options question. And then, I’ll show you the answer!
A Massive Problem
With options trading volumes more than 5 Billion contracts each year amounting to almost half a Trillion dollars in premiums, you might be wondering: How is it possible that most people can’t answer a simple options trading question?
I know, it makes no sense. And, here’s the kicker.
If you don’t know how to answer the simple question and guess at the answer, then you’re guaranteed to lose money over time.
The Top 1% Don't Guess
The Top 1% in the world aren’t guessing. They make millions of dollars using options. In fact, the greatest trade in the history of Wall Street was an Options trade. Several of the smartest investors made Billions of dollars using options betting against the housing market!
John Paulson made over $15 Billion himself!
Listen, the Top 1% have been profiting with options for decades. In a moment, I’ll show you how one of them currently owns a massive $20Bn option. But keep in mind, they only use options when they have the odds in their favor. When the risk reward is on their side. How do they know when that’s the case?
First, let me tell you the options trading question that has everyone puzzled.
The Simple Options Trading Question
You’re Guaranteed to lose over time if you can’t answer this question:
Which OPTION do I buy?
A Simple, logical question. Right?
Imagine that you’re thinking about using options and then given many different choices. You think to yourself: Which option do I buy?
And then, the follow up question: Why is that the best choice?
99% of investors guess. Others try to learn but realize they don’t understand what their being taught and stay away.
If you choose the wrong option, you’re playing a negative value game. What does that mean?
Let me explain it this way. Would you play heads or tails for money, where you win $1 if you pick correctly, but lose $2 when you’re wrong?
Of course not.
In essence, without knowing how to choose the right option, you’re playing this bad game of heads or tails. Which means that you’ll lose over time.
Don't Believe Me?
I challenge you to ask any options user the simple Options question. You’ll get many different answers. But you won’t get THE ANSWER.
And I guarantee that THE answer to that simple options trading question isn’t published or spoken about. Try Googling it.
That won’t work either I assure you. Why is that?
Because it’s a well-guarded secret on how to profit with options, known only by the Top 1%. It’s the secret to how to use options as a tool that helps MINIMIZE YOUR RISKS and MAXIMIZE YOUR REWARDS.
The Top 1% don’t play a game of Heads or Tails with these payouts. NEVER! And they don't engage in options trading like that either. They ONLY play options when they have the ODDS STACKED IN THEIR FAVOR!
The question is: How do they do that?
Well, don’t think for a second that I walked into Scoggin and was handed the keys to all the guarded secrets that the Top 1% use. I did ask the Simple Options Trading Question. The problem was I got back a simple answer:
“I’m not flipping a coin. I just know.”
It took me years to decipher what that meant. Keep in mind, I was a well-trained, derivative expert, who understood the risks inherent in options and had significant experience trading the product. However, knowing all that, didn’t get me the answer.
In fact, the Top 1% don’t need the options training I had to make their decisions. They need to know two things: the Target Stock Price for the Stock they’re looking at, and the amount of time they need to reach it. That’s it!
Something every Stock Investor knows how to do.
But that's not all.
The Top 1% know how to analyze their choices and choose the best option to stack the odds in their favor.
That’s the secret!
When I finally figured out the secret I was blown away. It was actually rather simple, yet incredibly hidden. I was shocked that it took me so long to see it. But, I could also understand why.
Imagine trying to find a treasure on a beach. If you started here and were given valid clues that led you far down the other side of the beach, wouldn’t it surprise you to learn that the treasure was only 10 feet from where you started. In fact, in hindsight, it might even seem obvious.
Using options like the Top 1% in the world, is actually really quite simple. Perhaps, almost obvious. Here’s how they do it…
A New Concept
Every option has a price embedded in it. A REALLY important price, that’s been hidden. Until now. I named that price the RISK REWARD BREAKEVEN PRICE. It’s a calculated price I created by modifying a simple well-known formula.
You won’t find it anywhere.
It simplifies what the industry has spent Billions of dollars and 30 years trying to do: Offer an easy way to determine whether an option is cheap enough to buy so that the odds are stacked in YOUR favor. Why is that important?
The Top 1% only buy “Cheap” options to leverage their expectations.
How you determine a “Cheap” option is the SECRET.
Let me show you an example. Even if you don’t know options yet, simply follow along. You’ll get the point.
Example: FB Options
Assume we think FB is about to make a move higher in the next month. Our Target Stock Price is $202. Here’s the options chain where we find all of the 1-month option prices. Because we’re bullish on FB, we’re looking for the right call option to buy.
There’s plenty of choices. Remember, we’re looking for “cheap” options, where the odds are in our favor. The question is: How do we do that?
I really want you to appreciate this moment. You’re looking at 10-20 different possible choices.
This is the exact moment where EVERYONE is confused. The moment that determines Guaranteed Losses if you don’t understand how to come up with THE Answer.
And no matter how many books you read, videos you watch, or conferences you attend. You still won’t get THE answer.
Only the Top 1% know the SECRET.
I get it. This sounds incredible. Borderline ridiculous. But, if you have some options experience, or you’re even a professional, then you know exactly what I’m saying.
Now let me reveal what I’ve come up with that transforms this Secret, into a simple to understand process.
An Easy Process
Look at the $197.50 FB Call option. The most important information you need to make a decision is the market’s expected price built into that option premium. If you recall, that expected price is the Risk Reward Breakeven Price. For this option, it’s $202.56.
So, what does that mean?
When looking to buy calls, if your Target Stock Price is greater than this RISK REWARD BREAKEVEN PRICE, then that option is considered cheap.
In this case, your Target Stock Price ISN’T HIGHER than the Risk Reward Breakeven Price. This means that the market has already priced your expectations into the options premium. In other words, you would consider this option Expensive.
How about the FB $192.50 call option?
The Risk Reward Breakeven Price for this option is $200.61. Here, your Target Stock Price is greater than the Market’s expectations embedded in the options premium, so it’s considered “Cheap.”
The $197.50 were expensive. The $192.50’s are cheap. And remember, Cheap Options are the only options that the Top 1% buy.
There are a few other nuances, but essentially, it’s that EASY!
We didn't use any Volatility metrics. No Greeks. No math. And certainly, no Black-Scholes formula.
A Options Trading Game Changer
The RISK REWARD BREAKEVEN PRICE is the next great advancement in options that unlocks the secret to using OPTIONS the right way and gives everyone a chance to use them just like the Top 1% in the world.
Frankly, this is a gamechanger.
In a minute, I’ll show you how to find the RISK REWARD BREAKEVEN PRICE.
But first, let me ask you: Why is all this important right now?
Well, let’s get back to where we started.
A Hedge Fund Shifts Its Risk-Reward
Right now, the market is vulnerable to a very large move. After getting in during the 2009 lows, the Top 1% are changing gears right here. A warning signal issued by the VIX has them lowering their direct exposure and managing their Risk Reward outlook.
It doesn’t mean they’re getting out completely. It simply means HOW they’re managing risk at this very moment is changing. And during these times, Options play an increasing role in that process.
Look at Oaktree Capital, one of the elite Money Managers in the market. They’ve recently announced the paring down of positions and the accumulation of a $20 Billion cash war chest to prepare for “the turn” in this bull cycle.
Are they completely out of the market? No.
Their approach is simply changing as the risk reward profile of the market has changed. The Risk is higher here than it was in 2009.
Oaktree’s CEO Jay Wintrob added:
"When the cycle turns it will be faster and larger than ever…”
- May 31st, 2018. “A Distressed-Debt Titan Sees Drought Ending in $1 Trillion Flood” Bloomberg, Katherine Doherty
Options help turn this into this again!
Back to Right Now
Where Is the Market Going
Look, right now we’re confronting the conclusion to the greatest financial experiment in history. The Federal Reserve is navigating through treacherous waters here trying to unwind Trillions of dollars of debt. Interest rates are on the rise.
Remember, our company World Inc.?
If you rattle the Bond Market, Stock market volatility will undoubtedly follow. And because of the Bond Market’s size, it doesn’t take much of a move here to move the Stock portion.
Again, the questions on everyone’s mind are:
- Will it work?
- Can the Fed do it?
- And where will the market go?
These questions have the Top 1% in the world at odds. But even if they think the market will crash they still keep buying exposure to the market, picking their stocks carefully, and using options to manage the risk reward.
Why would they do that?
Because they can’t afford to miss out on a stock rally if the Fed manages to escape unscathed. So, if you’re looking for a clear answer on the direction of the market, then you’re missing the point.
The only true answer is: No One knows.
The Top 1% Manage the Risk
The point is not what happens. The point is HOW the Top 1% manage the risk of either outcome happening. The Top 1% want to win both ways. And they do that by using options.
Now let me show you something really interesting. Take a closer look at Oaktree’s positioning again. They are mostly in cash but still have some exposure to the market.
Remember, before paring down their portfolio it looked like this with more risk.
Now, let’s look at a simple portfolio that holds 1 stock: AAPL.
And let’s assume that this portfolio of 100 shares of AAPL stock wants to reduce that exposure. Now, imagine selling the 100 shares of AAPL and buying an AAPL call option. A Call option simply gives you exposure to AAPL shares going higher but limits your liability if it goes lower.
This simple portfolio turns into something like this.
You can see most of the portfolio went into cash, while some of the exposure remained with the Call options. There is obviously much less risk in this new portfolio.
Now compare the two scenarios, Oaktree’s $20Bn fund and our simple AAPL portfolio that owns a Call Option.
They look similar, right?
Oaktree has created a giant Call Option on their $20bn fund! By listening to the market’s warning sign, Oaktree has prepared themselves to make a fortune with a large move in the market. In either direction!
Now, obviously Oaktree has many positions. Does that mean they sold every position they had?
No. It could also mean they pared down the risk of certain positions using options.
Options Trading Like the Top 1%
Let me be clear, using options is not the SECRET. Like I told you, there are 5 billion options traded annually. Investors already understand that they’re a valuable investment tool. But, are they using it correctly?
The SECRET known only to the Top 1% has always been the process of choosing the right situations to use options and then choosing the right option.
This is where 99% of unsuspecting investors guess. And guessing leads to Guaranteed Losses.
The Top 1% don’t guess! They listen to the market’s signal that risk is rising and then, look for specific opportunities to buy “Cheap” options and manage that risk.
Now that you know the secret, I am begging you to STOP GUESSING!