Options market makers profit handsomely with ITM options. Incredibly, most investors don’t even know how much they give away.

If you are an options buyer, then selling ITM options is usually a positive experience because it means that you’re likely making money. And when people make money, they tend to be looser with their trading. Suddenly, it's easier to give away $50 when closing a profitable trade because... "Hey, you're making money!"

On the flip side, if you’re an options seller and the option goes ITM, then it’s likely that the trade went against you. Fear might sink in and the “Just get me out!” mentality takes over. During these times, price becomes less important than quickly closing the position.

Both emotional states distract you from the focus of getting the right price. Not only is that important, but it can also be difficult to do with ITM options.

ITM options usually have wider bid-offers than other options. This often makes it frustrating to exit the trade, especially when they are excessively wide. During these moments, knowing the right price becomes critical. Why?

If you trade at the wrong price, then you’re giving away free money to an options market-maker. You want to avoid that unless giving away free money interests you. If it does, then I would suggest you learn how to trade at the right price and donate the saved money to your favorite charity. 

Remember, every extra penny you save in your execution is greater profits in your pocket. For example, saving $0.10 on a 10-lot makes you an extra $100.00. Now, think about how many options contracts you trade each year.

Ya, exactly!

Those $0.10 add up quickly.

If you trade 100 ITM contracts over the course of a year and lose $0.10 per trade, it amounts to $1,000 of free giveaways. 1,000 ITM contracts adds up to $10,000 that you could have saved.

And you wonder how options market makers make $Billions per year?

Most investors are unknowingly giving away their money for free.

Stop doing that!

Get smarter.

Find options education that makes a difference in your wallet.

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Over the last two decades, options market makers have feasted on investors who don’t understand the relationship between Options and Stock Dividends. They do a very specific trade that preys on investors who forget to exercise their Call options ahead of a dividend. These “Dividend trades” produce $millions of profits for the professionals... overnight!

Let me be clear, not all Call Options should be exercised.

However, if you fail to exercise a Call option when it should be exercised, then you take a loss on the number of contracts you own multiplied by the dividend (and the option multiplier).

For example, assume you own 10 Call options that should be exercised for a $0.60 stock dividend. If you hold the option overnight and don’t exercise, then you’ll lose $600 the next day (10 contracts x 100 multiplier x $0.60).

Who takes that money all the way to the bank?

The Options market makers profit most of that $600 with almost no risk.

Making money because investors don’t fully understand options is just another day at the office for the options market maker.

Bottomline, know when Call options should be exercised or sold prior to a dividend.

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This is going to sound unbelievable.

But it’s real. And bad. Actually... Really bad!

#3 is probably the most serious disadvantage you face and don’t even realize it.

The best way to explain the problem is with a game of Heads or Tails.

You wouldn’t play Heads or Tails where you win $10 or lose $20 on the coin flip, right?

Of course not.

But we should acknowledge that it’s possible to win playing that game.

For example, if you flip the coin 5 times and correctly call the right side each time, then you win $50.

Unfortunately, you’ll lose all your money if you keep playing.

It’s a mathematical certainty!

Think about buying options the same way.

Sometimes you’ll win buying options and sometimes you will lose.

But there is a process in buying options the right way that can give you an edge.

And that involves picking the right strike price.

If you don’t know how to pick the right Strike Price, then the underlying math eats away at your profits. To be clear, this means that the more you buy options without understanding how to pick the right strike price, the faster you will lose your money.

Who wins?

Yet again, it’s the options market-makers.

And the fact that you can’t see the losses mounting, doesn’t mean it isn’t happening.

I assure you that over time you will lose if you keep guessing.

But the problem gets worse.

The industry doesn’t teach you how to pick the right strike.

You can’t find an answer to that simple options question anywhere. It’s a secret known only by the Top 1% of investors.

Now that’s a big statement, I get it.

Look, the most profitable scenario for options market makers is millions of investors buying options and guessing at the right strike price.

Hmmm, exactly what’s happening right now.

“Thank you, Robinhood!” says every options market-maker.

Stop Guessing at the Strike Price

The hardest part is admitting to yourself that you're guessing.

And it's difficult to look back and realize the hundreds of hours spent watching YouTube videos never actually gave you the answer to the most important question:

Which option should I buy?

The only comfort I can give you is this:

Most investors don’t know how to choose the right strike price either.

And more importantly, it’s not your fault.

The industry teaches options backwards. It teaches definitions, Greeks, volatility, spreads, and strategies.

But it rarely teaches the simple decision that matters most when you have a stock idea:

Which option gives me the best risk-reward?

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Ever wonder why stocks tend to gravitate towards the nearest strike with the highest Open Interest at Expiration?

This is caused by a concept called “Pinning,” often referred to as “Max Pain.”

Theoretically, Max Pain is where a stock expires at the strike price that creates maximum losses for buyers of options.

The gains would be made by the “option sellers,” which for arguments sake are the options market-makers.

That’s the simple thought.

Too simple, actually.

In fact, Max Pain involves much more than that.

It’s certainly not as easy as pointing to the Strike Price with the highest Open Interest and thinking that the stock will land there.

In fact, the only way to effectively use Max Pain to your benefit is by fully understanding the different concepts that cause it. And more importantly, how and why the options market makers have a decisive advantage here.

So, don’t guess with Max Pain.

Remember, guessing while trading options is the easiest way to give your money away for free.

Again, I’d rather see you donate it to a charity of your liking than contributing to a $100 million mansion that you will never enter.

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Have you ever been pick-pocketed?

It’s a terrible feeling.

You get to the store register. Reach for you pocket… and it’s gone!

I don’t wish that on anyone.

But here’s a different scenario…

Imagine the thief took your wallet, removed half of your cash, then put your wallet back in your pocket.

Would you think it was stolen?

Would you even notice?

There’s a certain action options market makers take at certain times of the day that unknowingly skim profits from options buyers.

A lot of profits!!!

Unfortunately, it’s hard to see. And unless you know where to look, you aren't going to find it.

In fact, only an expert with real experience will be able to point it out to you.

But once you understand what’s happening, you can see it clearly every single day.

Incredibly, this technique likely accounts for 30% of the options market makers’ profits.

The education at OptionsGeek describes how this trick is done and shows you real examples to help you understand.

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Ever feel like someone is trading ahead of you when trading an option?

Well, they just might be.

Front-running, or the act of someone trading ahead of your order on inside knowledge of the order and affecting the price, is illegal.

But…

Might there be a way for an options market maker to legally front-run your option order?

Yes!

How do I know?

I used to do it myself against the biggest Hedge Fund Managers in the world until the industry  changed the rules on me.

Today's version is completely legal.

As you can imagine, it's also highly profitable.

And very hush-hush.

In fact, making $Billions in today's market has never been easier for the options market makers.

This one needs a bit more of an explanation, but you won’t believe how they can legally front-run your order.