All about Income Trading with Options
“Options Masters endeavours to provide traders with a fast track methodology to trade options consistently for a monthly income”
Here is a short FAQ to better delineate what OM is and what it is not:
What is OM’s Target?
There are great tutoring resources in the United States, so we shall focus primarily on an audience in Europe, Middle East and Africa. This OM site is available in multiple languages thanks to Google Translate. The intention is to also offer a subsite entirely written in French. Coaching and support are in any case offered in either English or French.
The coaching entry level is intermediate to advanced but a “rookie’s corner” with links to tutorials and mentoring classes is also available (please also check our partner site Capital Discussions).
Please check this page to see if OM can satisfy your quest for better simpler options trading.
What kind of strategy ?
Learning options can appear overwhelming for a novice or even intermediate level trader. So, OM focuses primarily on a very few monthly strategies that comply to 5 simple criteria:
- Liquid European-style index options (SPX, RUT, NDX)
- Low to moderate risk (proven track record)
- Market neutral (Delta-neutral), with
- Time on your side (time decay or Theta-negative) and
- Slow moving to reduce the “stress factor” i.e. a high degree of anticipation on the position’s behaviour according to market situation (Note an exception for weekly strategies though)
What do we mean by “income trading with options” ?
OM’s core monthly strategies show a historical win rate of 85% i.e. around 10 months each year, with limited losses that generally remain lower than an average winning month. Consistence does not only mean good performance for the portfolio; it also builds confidence in trading options methodically. The approach for the main strategy called the Weirdor (see picture) is actually very rigorous, quasi mechanical, and it uses alerts that most of the times anticipate possible trade adjustments with minimal stress. This Weirdor strategy is the ideal kickstart trade for anyone who has some prior knowledge of the Greeks.
Why “Income” ? Why not capitalising profits and gradually trade larger amounts ?
Options trading regulations require the broker to hold a margin amount, i.e. the traders trades on “block” amounts of capital set aside by the broker. It is up to the trader to save profits until he or she can increase the trade size. Larger accounts (10 times minimum size) can of course capitalise and/or diversify to new options strategies.
However, it is generally used as an income supplement for hobbyist or income substitution for full-time traders.
What return can one expect ?
On a Reg. T account, the average performance is around 3% on margin per month. An experienced trader diversifying his/her portfolio can expect a little more, in the 3-5% range per month. These returns are calculated on margin. It is however recommended to have around 20% spare cash in the portfolio, so the actual return on account must be reduced accordingly. An overall return of 30% per year (uncompounded) is not only realistic but also reasonable.
Fast Track… ? How long does it take to learn the craft ?
Any advanced options trader could read the 20 page Weirdor document and start trading the strategy the following week. OM however endeavours to bring the method to any serious trader, even beginner over a period to 3 to 6 months for a single strategy. If need be, a refresher course on Greeks can be offered to attain the prerequisite level. Be reassured though: although trading options is technical, the level of maths involved is very reasonable. At the end of the course, students are always invited to remain active in the OM community, and they can be assisted as long as they choose to.
After or along with the Weirdor course, it is recommended to learn other powerful income trading techniques (e.g. BB, M3) for better portfolio diversification. The more active traders may also wish to tackle weekly strategies to spice up the overall performance.
What Options Masters is NOT about ?
Options Masters is all about building an open-ended community of like-minded traders, with proven core strategies that comply to simple income trading criteria. The OM Team would only be too happy to see OM Members take it to a different level, new avenues, new discoveries. None of us are “gurus”, none of us pretend to know everything to options. The field can indeed develop into complex arcanes we all want to stay clear of. If there is one motto to keep in mind, that will be: “Under-Promise, Over-Delivery”. Options Masters makes no high-flying Mission Statement to aim for the best based solely on the inner resources and skills of its core Team. On the contrary we believe in a OM Community going from strength to strength, working together to trade options better and better.
Please visit the members-only website where it all happens: Options-Forum.com
Et le Français ???
Options Masters is definitely community oriented with a target audience in Europe (EMEA) time zones. The options jargon is all in English, and the instruments of choice are US index based (RUT, SPX, NDX). That said, all OM Team members are bilingual, French and English.
Même si la vitrine est dans la langue de Shakespeare, nous espérons vivement créer une forte communauté de traders francophones. Derrière cette première apparence, les discussions, cours, coaching et support sont disponibles en Français. Le site était en cours de traduction mais un bug semble effacer les pages en Français. Le site va donc être dupliqué sur Options-Masters.fr qui est déjà en cours de construction.
Next Step ?
Why don’t you navigate the OM site using the menu on the top right hand-side of this page ? Or please click here for more detail on courses and the OM Community. There is a free forum on this OM site, and a lot more in the member site options-agora.com
Please also check regular posts and updates on OM’s FaceBook page.