The Options Edge of a Top Hedge Fund Manager
Over the last several years, the industry has done a tremendous job of getting investors to try options trading. What's unclear for most investors is how they can gain an advantage, or edge, by using the product. More specifically, how can they get the options edge needed to succeed just like the top Hedge Fund Managers in the world?
In this lesson, you'll learn:
- What it take to be successful with options,
- Exactly where the top Hedge Fund Managers gain their Options Edge.
- 4 easy steps you can do to start shifting the odds back in your favor.
Requirements to be Successful with Options
All types of investments involve an investment process and a plan of action. Investing with options is no different. Unfortunately, there are millions of retail investors using options without:
- Fully understanding the product.
- An Investment Process.
- An Options Plan.
To be successful with options over the long-term, you'll need all three of the above. Within each of those 3 areas, you'll need to find an advantage.
For context, here's 4 areas where the Top 1% gain their advantage, or what the industry calls "Edge."
Edge #1: The Trade Idea
A large part of being successful in the stock market is your ability to be find or access good ideas. To put it simply, it won't matter how much you know about options if all you get is bad ideas.
When I ask the question:
“Where do the Top 1% of investors have an advantage?”
Most people give an answer describing how and where the best investors find their Ideas. And they would be right.
The Top 1% can better analyze their ideas because they have the more resources, capital, experience, and better access to information.
They use experts in fundamental analysis, technical analysis, and quantitative analysis, along with access to industry consultants. The Top 1% also acquire important and very expensive data that the average investor can't get access to.
All of this information helps them formulate the best possible risk-reward profile of a company and its stock price.
This is clearly their advantage (#1).
But that's just the start of it.
Options Edge #2: Options vs. Stocks
After the Top 1% find and thoroughly analyze their idea, they have to decide how they will invest in the idea. Most beginners just assume that every idea is an Options idea.
This is a big mistake.
While the top investors can use several different ways to invest in an idea, the decision generally comes down to using options vs stocks, or both.
More specifically, they have to decide which choice offers them the best risk-reward opportunity.
Is the idea better suited as an options trade, or as a stock trade?
Understanding if and when they should use options is their Options Edge (#2).
Options Edge #3: The Most Important Options Question
Once they decide that the idea is better suited for options, the Top 1% have to make another critical decision.
They have to choose the right Option they want to buy.
Choosing the right option is one of the most sought after answers in Options Trading. And I will tell you this... It's also the most important!
Knowing exactly how to choose the right options that maximize their returns while minimizing risk, gives the Top 1% an Options Edge. (#3)
Options Edge #4: A Plan
Finally, the fourth area where the Top 1% find edge is in their Trading Plan.
There are many facets to a Trading Plan (#4), some being:
- How much capital to invest in a position.
- Entering the trade.
- Exiting the trade.
- Risk Managing the Trade.
In my online Online Options Trading Course 3 Steps to Profit, I walk you through the nuances of an Options trading Plan.
How You Can Gain an Advantage with Options
Those are the 4 areas of the Investment Process where the best in the world gain their Edge. It’s all done for the pursuit of better profits with controlled risk management.
Here are 4 easy steps for you to gain an advantage and start trading like a top Hedge Fund Manager:
Step 1: Get Educated.
Options is not just about Calls and Puts. There is a lot more to understand that can help you make key decisions while trading. And I'm not talking about complicated concepts.
Quality education makes the learning experience practical. I built the Best Options Trading Course for you to do just that.
3 Steps to Profit contains brand new material with new concepts that are easy to understand. More importantly, it enhances the learning process with examples and tools you can use to gain experience.
Because of that, 3 Steps to Profit teaches you faster, helps you retain more, and gives you the Options Edge you need to succeed ... Just like a top Hedge Fund Manager!
Step 2: Unusual Options Activity.
After completing this beginner section, I've created a starting point for Unusual Options Activity in the "Intermediate" section.
You'll learn why this strategy is so powerful and how you can "steal" some of the Hedge Fund Manager's advantage. Check out this sneak peek:
Step 3: New Options Chain
Start using my patented New Options Chain to gain an options edge. This tools helps you answer the toughest question in options: How do you choose the right option to buy? There is no available education that answers that question and proves why that answer is correct. You can learn more about the New Options Chain in the OptionsGeek Tools section or by watching this quick video:
Step 4: Trade Ideas
Finding great Options Trade Ideas is a skill you'll learn over time with OptionsGeek. More specifically, you'll learn where to find them, how to analyze them, what to look for, and how to trade them. This will become your options edge.
Make sure you sign up to our daily Options Trading Newsletter. You get the Top 3 Unusual Options Activity trades going on in the market each day. If you want to see how valuable this process can be, take a look at the results from the best Options Trading Alert Service.
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Every. Single. Day.
It would be awesome to have you onboard.
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Now, that you know where and how you can gain an options edge, let's get back to an example.
I want to show you (exactly) what it means to maximize returns while minimizing risk. In the next lesson, we take a further look at that important decision outlined above - Options vs. Stocks.