{"id":49563,"date":"2020-01-30T10:26:35","date_gmt":"2020-01-30T15:26:35","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=49563"},"modified":"2023-06-08T11:53:37","modified_gmt":"2023-06-08T15:53:37","slug":"huge-options-trading-blunders-i-made-1000-return-on-an-out-of-the-money-call-episode-3","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/huge-options-trading-blunders-i-made-1000-return-on-an-out-of-the-money-call-episode-3","title":{"rendered":"Huge Options Trading Blunders: Maximizing Returns (Episode 3)"},"content":{"rendered":"

Today’s video continues our series on Options Trading Blunders and covers the fatal flaw in buying way out of the money, cheap calls on stocks. You’ll see a vivid example of the problems with this concept and how much money you’ll throw away by being lured into a program of buying cheap calls.<\/p>\nView Video Transcript<\/strong><\/span>

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okay so today’s video is the third in<\/div>\n<\/div>\n<\/div>\n
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our series entitled huge options trading<\/div>\n<\/div>\n<\/div>\n
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blunders<\/div>\n<\/div>\n<\/div>\n
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we’ve decided to produce this series for<\/div>\n<\/div>\n<\/div>\n
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traders who are really serious about<\/div>\n<\/div>\n<\/div>\n
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trading options for a living and taking<\/div>\n<\/div>\n<\/div>\n
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the proper steps to excel as an options<\/div>\n<\/div>\n<\/div>\n
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trader as opposed to fooling around with<\/div>\n<\/div>\n<\/div>\n
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ridiculous trading ideas that don’t make<\/div>\n<\/div>\n<\/div>\n
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any sense when you examine them<\/div>\n<\/div>\n<\/div>\n
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carefully<\/div>\n<\/div>\n<\/div>\n
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I’m the head trader of SMB capital’s<\/div>\n<\/div>\n<\/div>\n
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options trading desk here in Manhattan<\/div>\n<\/div>\n<\/div>\n
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and I can tell you for many years of<\/div>\n<\/div>\n<\/div>\n
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experience that the pitfalls we’re gonna<\/div>\n<\/div>\n<\/div>\n
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be describing the in these videos are<\/div>\n<\/div>\n<\/div>\n
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real and if you’re serious about trading<\/div>\n<\/div>\n<\/div>\n
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for a living you really need to pay<\/div>\n<\/div>\n<\/div>\n
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close attention to these videos so that<\/div>\n<\/div>\n<\/div>\n
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you can avoid serious problems in your<\/div>\n<\/div>\n<\/div>\n
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trading journey so if you’re committed<\/div>\n<\/div>\n<\/div>\n
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to changing careers and trains ik<\/div>\n<\/div>\n<\/div>\n
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trading full-time as an options trader<\/div>\n<\/div>\n<\/div>\n
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then I urge you to watch this video and<\/div>\n<\/div>\n<\/div>\n
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the rest of the videos in this series so<\/div>\n<\/div>\n<\/div>\n
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that you don’t fall by the wayside like<\/div>\n<\/div>\n<\/div>\n
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so many aspiring traders who don’t want<\/div>\n<\/div>\n<\/div>\n
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to spend the time to learn the actual<\/div>\n<\/div>\n<\/div>\n
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truth about the challenges and rewards<\/div>\n<\/div>\n<\/div>\n
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of options trading<\/div>\n<\/div>\n<\/div>\n
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[Music]<\/div>\n<\/div>\n<\/div>\n
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hi I’m Seth Freiburg and I’m the head<\/div>\n<\/div>\n<\/div>\n
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trader of SMB capitals options trading<\/div>\n<\/div>\n<\/div>\n
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desk SMB capital is a proprietary<\/div>\n<\/div>\n<\/div>\n
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trading firm located in midtown<\/div>\n<\/div>\n<\/div>\n
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Manhattan and we provide capital for<\/div>\n<\/div>\n<\/div>\n
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options and equity traders from all over<\/div>\n<\/div>\n<\/div>\n
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the world trading both remotely in our<\/div>\n<\/div>\n<\/div>\n
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offices in here in New York City now I’d<\/div>\n<\/div>\n<\/div>\n
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like to suggest that you click on our<\/div>\n<\/div>\n<\/div>\n
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subscribe button right now so that you<\/div>\n<\/div>\n<\/div>\n
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don’t miss any of our free trading<\/div>\n<\/div>\n<\/div>\n
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videos that we produce for traders and<\/div>\n<\/div>\n<\/div>\n
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investors all over the world they’re<\/div>\n<\/div>\n<\/div>\n
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really very valuable ok so today we’re<\/div>\n<\/div>\n<\/div>\n
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going to be looking at options trading<\/div>\n<\/div>\n<\/div>\n
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blunder number 3 in our series on<\/div>\n<\/div>\n<\/div>\n
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options myths and huge mistakes that you<\/div>\n<\/div>\n<\/div>\n
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can make as an options trader so blunder<\/div>\n<\/div>\n<\/div>\n
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number 3 starts out with the fact that<\/div>\n<\/div>\n<\/div>\n
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people get lured into the idea that<\/div>\n<\/div>\n<\/div>\n
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options are a way to control 100 shares<\/div>\n<\/div>\n<\/div>\n
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of his stock for a lot less than the<\/div>\n<\/div>\n<\/div>\n
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price of the shares if you went out and<\/div>\n<\/div>\n<\/div>\n
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bought them outright for cash and it is<\/div>\n<\/div>\n<\/div>\n
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true that if you buy a call option at a<\/div>\n<\/div>\n<\/div>\n
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strike price above the market price of<\/div>\n<\/div>\n<\/div>\n
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that stock then you do have the right to<\/div>\n<\/div>\n<\/div>\n
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buy 100 shares of that stock at the<\/div>\n<\/div>\n<\/div>\n
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strike price of your call option and<\/div>\n<\/div>\n<\/div>\n
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regardless of how high that stock goes<\/div>\n<\/div>\n<\/div>\n
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so what that means is that the value of<\/div>\n<\/div>\n<\/div>\n
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that option can increase greatly The<\/div>\n<\/div>\n<\/div>\n
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Closer that the market price of the<\/div>\n<\/div>\n<\/div>\n
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stock gets to the strike price of the<\/div>\n<\/div>\n<\/div>\n
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option that you bought that part is true<\/div>\n<\/div>\n<\/div>\n
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so they then take that information and<\/div>\n<\/div>\n<\/div>\n
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they figure this hey if I don’t buy the<\/div>\n<\/div>\n<\/div>\n
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shares of the stock but instead if I<\/div>\n<\/div>\n<\/div>\n
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just buy a cheap call option then my<\/div>\n<\/div>\n<\/div>\n
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leverage is greatly increased and so my<\/div>\n<\/div>\n<\/div>\n
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returns will be greatly increased on my<\/div>\n<\/div>\n<\/div>\n
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trades because I can buy that call much<\/div>\n<\/div>\n<\/div>\n
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much cheaper than I can buy 100 shares<\/div>\n<\/div>\n<\/div>\n
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of stock and in fact here’s an example<\/div>\n<\/div>\n<\/div>\n
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of just such a situation which worked<\/div>\n<\/div>\n<\/div>\n
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out very well so let’s take a look at<\/div>\n<\/div>\n<\/div>\n
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Priceline back in the middle of 2017<\/div>\n<\/div>\n<\/div>\n
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when it was trading at 1810 so now let’s<\/div>\n<\/div>\n<\/div>\n
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take a look at the options which would<\/div>\n<\/div>\n<\/div>\n
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have expired on July 21st of that year<\/div>\n<\/div>\n<\/div>\n
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now if you move up the options chain way<\/div>\n<\/div>\n<\/div>\n
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above the market price of 1810 you’ll<\/div>\n<\/div>\n<\/div>\n
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see that 1950 call option expiring on<\/div>\n<\/div>\n<\/div>\n
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July 21st and you’ll see that it has a<\/div>\n<\/div>\n<\/div>\n
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price of four dollars and thirty five<\/div>\n<\/div>\n<\/div>\n
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cents well a call option gives you the<\/div>\n<\/div>\n<\/div>\n
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right to buy 100 shares of the stock so<\/div>\n<\/div>\n<\/div>\n
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you’d have to pay four dollars and<\/div>\n<\/div>\n<\/div>\n
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thirty five<\/div>\n<\/div>\n<\/div>\n
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times 100 or in other words $435 to buy<\/div>\n<\/div>\n<\/div>\n
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that call option now there was a<\/div>\n<\/div>\n<\/div>\n
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specific reason that we decided to buy<\/div>\n<\/div>\n<\/div>\n
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that particular strike in this example<\/div>\n<\/div>\n<\/div>\n
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and that’s because the option has what<\/div>\n<\/div>\n<\/div>\n
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is called a delta of about 10 which<\/div>\n<\/div>\n<\/div>\n
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statistically means that there’s about a<\/div>\n<\/div>\n<\/div>\n
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10% chance that the stock will be at or<\/div>\n<\/div>\n<\/div>\n
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above that strike price of 1950 on the<\/div>\n<\/div>\n<\/div>\n
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day that those options expire<\/div>\n<\/div>\n<\/div>\n
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incidentally most online brokers<\/div>\n<\/div>\n<\/div>\n
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automatically give you the Delta of each<\/div>\n<\/div>\n<\/div>\n
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option that you’re trading so you don’t<\/div>\n<\/div>\n<\/div>\n
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have to figure that out for yourself<\/div>\n<\/div>\n<\/div>\n
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it’s arrived at through a mathematical<\/div>\n<\/div>\n<\/div>\n
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formula that you don’t need to worry<\/div>\n<\/div>\n<\/div>\n
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about because your broker will calculate<\/div>\n<\/div>\n<\/div>\n
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it for you okay so anyway now you’re<\/div>\n<\/div>\n<\/div>\n
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thinking to yourself hey I’m a pretty<\/div>\n<\/div>\n<\/div>\n
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smart guy I mean I can control hundred<\/div>\n<\/div>\n<\/div>\n
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shares of Priceline stock for four<\/div>\n<\/div>\n<\/div>\n
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hundred thirty-five dollars instead of<\/div>\n<\/div>\n<\/div>\n
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having to shell out for 100 shares a<\/div>\n<\/div>\n<\/div>\n
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hundred eighty-one thousand dollars I<\/div>\n<\/div>\n<\/div>\n
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mean wouldn’t you rather plunk down four<\/div>\n<\/div>\n<\/div>\n
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hundred thirty-five dollars so that the<\/div>\n<\/div>\n<\/div>\n
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worse that gets for you is a loss of<\/div>\n<\/div>\n<\/div>\n
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just that for 35 if Priceline never<\/div>\n<\/div>\n<\/div>\n
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reaches my strike price of nineteen<\/div>\n<\/div>\n<\/div>\n
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fifty I mean you’d be crazy to buy the<\/div>\n<\/div>\n<\/div>\n
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shares for over a hundred eighty<\/div>\n<\/div>\n<\/div>\n
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thousand dollars if you could control<\/div>\n<\/div>\n<\/div>\n
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that same number of shares for $435<\/div>\n<\/div>\n<\/div>\n
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right and in fact let’s take a look at<\/div>\n<\/div>\n<\/div>\n
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what happened about a month later on the<\/div>\n<\/div>\n<\/div>\n
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day that the option is set to expire<\/div>\n<\/div>\n<\/div>\n
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well at this point Priceline had rallied<\/div>\n<\/div>\n<\/div>\n
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like crazy and the stock is now trading<\/div>\n<\/div>\n<\/div>\n
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at nineteen ninety eight so now the<\/div>\n<\/div>\n<\/div>\n
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strike price of the call option is<\/div>\n<\/div>\n<\/div>\n
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nineteen fifty and the stocks at<\/div>\n<\/div>\n<\/div>\n
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nineteen ninety eight forty eight points<\/div>\n<\/div>\n<\/div>\n
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higher than the strike price said the<\/div>\n<\/div>\n<\/div>\n
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option moments before it is expiring is<\/div>\n<\/div>\n<\/div>\n
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now worth about forty eight dollars<\/div>\n<\/div>\n<\/div>\n
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which happens to be more than ten times<\/div>\n<\/div>\n<\/div>\n
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the original price of the option so you<\/div>\n<\/div>\n<\/div>\n
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say to yourself you see I was right I<\/div>\n<\/div>\n<\/div>\n
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only had to shell out four hundred<\/div>\n<\/div>\n<\/div>\n
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thirty-five dollars when I got myself a<\/div>\n<\/div>\n<\/div>\n
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ten bagger my trade is worth ten times<\/div>\n<\/div>\n<\/div>\n
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what I paid for it well that’s an<\/div>\n<\/div>\n<\/div>\n
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amazing return I mean I should do this<\/div>\n<\/div>\n<\/div>\n
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every month and I’ll make a thousand<\/div>\n<\/div>\n<\/div>\n
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percent return on my money I mean if I<\/div>\n<\/div>\n<\/div>\n
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could just scrounge together ten<\/div>\n<\/div>\n<\/div>\n
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thousand bucks I could make a hundred<\/div>\n<\/div>\n<\/div>\n
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thousand dollars so I should just quit<\/div>\n<\/div>\n<\/div>\n
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my job and go out and buy ten Delta<\/div>\n<\/div>\n<\/div>\n
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calls every month and I’ll be rich right<\/div>\n<\/div>\n<\/div>\n
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so you’ll all open up your<\/div>\n<\/div>\n<\/div>\n
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and scream out options trading blunder<\/div>\n<\/div>\n<\/div>\n
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number three I made a thousand percent<\/div>\n<\/div>\n<\/div>\n
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return on a cheap out-of-the-money call<\/div>\n<\/div>\n<\/div>\n
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and every one of your neighbors will<\/div>\n<\/div>\n<\/div>\n
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look at you with envy and you’ll be just<\/div>\n<\/div>\n<\/div>\n
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rolling in it you just do this every<\/div>\n<\/div>\n<\/div>\n
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month and you’re set right well not<\/div>\n<\/div>\n<\/div>\n
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really<\/div>\n<\/div>\n<\/div>\n
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now before we explain why thinking in<\/div>\n<\/div>\n<\/div>\n
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this way leads to such blunders as an<\/div>\n<\/div>\n<\/div>\n
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options trader I wanted to let you know<\/div>\n<\/div>\n<\/div>\n
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that there really are in fact sound<\/div>\n<\/div>\n<\/div>\n
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techniques for trading options for<\/div>\n<\/div>\n<\/div>\n
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income and in fact we’re currently<\/div>\n<\/div>\n<\/div>\n
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running a – our free intensive workshop<\/div>\n<\/div>\n<\/div>\n
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at the moment where we’ll be teaching<\/div>\n<\/div>\n<\/div>\n
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you three of the strategies that real<\/div>\n<\/div>\n<\/div>\n
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professional options traders use<\/div>\n<\/div>\n<\/div>\n
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including a really simple but incredibly<\/div>\n<\/div>\n<\/div>\n
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effective strategy that some of the<\/div>\n<\/div>\n<\/div>\n
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greatest investors in the world like<\/div>\n<\/div>\n<\/div>\n
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Warren Buffett use all the time plus an<\/div>\n<\/div>\n<\/div>\n
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options trading strategy that has a<\/div>\n<\/div>\n<\/div>\n
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statistical 80 percent probability of<\/div>\n<\/div>\n<\/div>\n
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profit month in and month out plus an<\/div>\n<\/div>\n<\/div>\n
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option strategy that you can employ with<\/div>\n<\/div>\n<\/div>\n
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the stock that you like where you’ll<\/div>\n<\/div>\n<\/div>\n
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make your target profit whether the<\/div>\n<\/div>\n<\/div>\n
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stock goes up goes nowhere or even goes<\/div>\n<\/div>\n<\/div>\n
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down a small percentage so if those<\/div>\n<\/div>\n<\/div>\n
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strategies would be of interest to you<\/div>\n<\/div>\n<\/div>\n
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then you should check out the free<\/div>\n<\/div>\n<\/div>\n
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options place that we’re currently<\/div>\n<\/div>\n<\/div>\n
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running just go ahead and click the link<\/div>\n<\/div>\n<\/div>\n
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that should be appearing now at the top<\/div>\n<\/div>\n<\/div>\n
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right corner of your screen that will<\/div>\n<\/div>\n<\/div>\n
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open the free registration page in a new<\/div>\n<\/div>\n<\/div>\n
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window so don’t worry you won’t lose<\/div>\n<\/div>\n<\/div>\n
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this video or you can just head on over<\/div>\n<\/div>\n<\/div>\n
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to options class com to register for<\/div>\n<\/div>\n<\/div>\n
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this free intensive workshop it’s a rare<\/div>\n<\/div>\n<\/div>\n
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opportunity for retail traders and<\/div>\n<\/div>\n<\/div>\n
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investors to learn directly from Wall<\/div>\n<\/div>\n<\/div>\n
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Street traders but that’s exactly what<\/div>\n<\/div>\n<\/div>\n
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you’ll be getting through this free<\/div>\n<\/div>\n<\/div>\n
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online workshop so click the link to<\/div>\n<\/div>\n<\/div>\n
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sign up now and don’t miss it why does<\/div>\n<\/div>\n<\/div>\n
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this seemingly great thought to buy<\/div>\n<\/div>\n<\/div>\n
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cheap out-of-the-money calls<\/div>\n<\/div>\n<\/div>\n
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lead to options blunder number three<\/div>\n<\/div>\n<\/div>\n
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well it comes down to the statistical<\/div>\n<\/div>\n<\/div>\n
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basis of options trading remember I told<\/div>\n<\/div>\n<\/div>\n
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you that a 10 Delta option has<\/div>\n<\/div>\n<\/div>\n
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approximately a 10% probability of<\/div>\n<\/div>\n<\/div>\n
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expiring in-the-money<\/div>\n<\/div>\n<\/div>\n
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well the flip side of it is that it has<\/div>\n<\/div>\n<\/div>\n
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a 90% chance of expiring completely<\/div>\n<\/div>\n<\/div>\n
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worthless meaning you lose your entire<\/div>\n<\/div>\n<\/div>\n
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investment in that call 90% of the time<\/div>\n<\/div>\n<\/div>\n
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I want you to let that sink in in other<\/div>\n<\/div>\n<\/div>\n
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words essentially what happened on the<\/div>\n<\/div>\n<\/div>\n
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trade that I just showed you is a fluke<\/div>\n<\/div>\n<\/div>\n
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it will only happen one out of ten times<\/div>\n<\/div>\n<\/div>\n
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on average during the year I’m<\/div>\n<\/div>\n<\/div>\n
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priceline is in fact the stock that<\/div>\n<\/div>\n<\/div>\n
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moves around a lot but we’re talking<\/div>\n<\/div>\n<\/div>\n
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about a hundred eighty eight point rally<\/div>\n<\/div>\n<\/div>\n
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from when we first entered the trade<\/div>\n<\/div>\n<\/div>\n
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that’s not going to happen every month<\/div>\n<\/div>\n<\/div>\n
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in fact it’s hardly ever going to happen<\/div>\n<\/div>\n<\/div>\n
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remember there’s only one case where<\/div>\n<\/div>\n<\/div>\n
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this option expires with any value at<\/div>\n<\/div>\n<\/div>\n
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all and that is if the price line were<\/div>\n<\/div>\n<\/div>\n
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to get past nineteen fifty buy enough to<\/div>\n<\/div>\n<\/div>\n
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pay for the call that you bought which<\/div>\n<\/div>\n<\/div>\n
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if you do the math means the price line<\/div>\n<\/div>\n<\/div>\n
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would actually have to get to nineteen<\/div>\n<\/div>\n<\/div>\n
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fifty four for you to make any money at<\/div>\n<\/div>\n<\/div>\n
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all on the option I want you to really<\/div>\n<\/div>\n<\/div>\n
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think about that when we first put this<\/div>\n<\/div>\n<\/div>\n
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trade on Priceline was it eighteen ten<\/div>\n<\/div>\n<\/div>\n
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so even a price line rallied 140 points<\/div>\n<\/div>\n<\/div>\n
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the option will go to zero on expiration<\/div>\n<\/div>\n<\/div>\n
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day well Priceline doesn’t have to go up<\/div>\n<\/div>\n<\/div>\n
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it can go down they can hardly move it<\/div>\n<\/div>\n<\/div>\n
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can go up a mere 130 points anything<\/div>\n<\/div>\n<\/div>\n
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below 140 point rally and the option has<\/div>\n<\/div>\n<\/div>\n
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\n
no value an expiration day because the<\/div>\n<\/div>\n<\/div>\n
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option to buy 100 shares at 1950<\/div>\n<\/div>\n<\/div>\n
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obviously has no value if the stock is<\/div>\n<\/div>\n<\/div>\n
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trading at less than 1950 and so the<\/div>\n<\/div>\n<\/div>\n
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option just dies with no value think of<\/div>\n<\/div>\n<\/div>\n
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\n
it this way in only one of the five<\/div>\n<\/div>\n<\/div>\n
\n
\n
cases does the option it do anything but<\/div>\n<\/div>\n<\/div>\n
\n
\n
die worthless if the stock goes down a<\/div>\n<\/div>\n<\/div>\n
\n
\n
lot goes down a little does it move it<\/div>\n<\/div>\n<\/div>\n
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\n
all or rallies a lot but not a hundred<\/div>\n<\/div>\n<\/div>\n
\n
\n
forty points even where it rallies a lot<\/div>\n<\/div>\n<\/div>\n
\n
\n
the damn things still expires worthless<\/div>\n<\/div>\n<\/div>\n
\n
\n
that’s how bad of a bet this is I mean<\/div>\n<\/div>\n<\/div>\n
\n
\n
if every month you bought that $10 call<\/div>\n<\/div>\n<\/div>\n
\n
\n
30 days from expiration like in the in<\/div>\n<\/div>\n<\/div>\n
\n
\n
this example and waited for that big<\/div>\n<\/div>\n<\/div>\n
\n
\n
upward move that you’d need to make that<\/div>\n<\/div>\n<\/div>\n
\n
\n
option worth anything on expiration day<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’d be sorely disappointed because it<\/div>\n<\/div>\n<\/div>\n
\n
\n
would not occur in almost any case<\/div>\n<\/div>\n<\/div>\n
\n
\n
because I as I mentioned statistically<\/div>\n<\/div>\n<\/div>\n
\n
\n
90% of the time that option will expire<\/div>\n<\/div>\n<\/div>\n
\n
\n
worthless believe me it’s a tortuous<\/div>\n<\/div>\n<\/div>\n
\n
\n
process to sit there and watch that call<\/div>\n<\/div>\n<\/div>\n
\n
\n
lose value every day even by the way if<\/div>\n<\/div>\n<\/div>\n
\n
\n
the stock is rallying because as every<\/div>\n<\/div>\n<\/div>\n
\n
\n
day goes by time is running out that the<\/div>\n<\/div>\n<\/div>\n
\n
\n
stock will actually reach the level of<\/div>\n<\/div>\n<\/div>\n
\n
\n
your call in fact that stock could have<\/div>\n<\/div>\n<\/div>\n
\n
\n
rallied four dollars every day for 36<\/div>\n<\/div>\n<\/div>\n
\n
\n
days before the option expires and the<\/div>\n<\/div>\n<\/div>\n
\n
\n
option still would have<\/div>\n<\/div>\n<\/div>\n
\n
\n
expired worthless and so even though you<\/div>\n<\/div>\n<\/div>\n
\n
\n
got the direction right and you bought a<\/div>\n<\/div>\n<\/div>\n
\n
\n
call you still lost all of your money<\/div>\n<\/div>\n<\/div>\n
\n
\n
that you have in the trade ok so just<\/div>\n<\/div>\n<\/div>\n
\n
\n
think about that you would lose a<\/div>\n<\/div>\n<\/div>\n
\n
\n
hundred percent of your investment in<\/div>\n<\/div>\n<\/div>\n
\n
\n
the trade nine out of ten times I’d like<\/div>\n<\/div>\n<\/div>\n
\n
\n
to meet the person who’s willing to sit<\/div>\n<\/div>\n<\/div>\n
\n
\n
through that and actually go through<\/div>\n<\/div>\n<\/div>\n
\n
\n
that experience eight nine ten months in<\/div>\n<\/div>\n<\/div>\n
\n
\n
a row lose a hundred percent of your<\/div>\n<\/div>\n<\/div>\n
\n
\n
initial investment in a trade in each of<\/div>\n<\/div>\n<\/div>\n
\n
\n
those months I’d like to meet that guy<\/div>\n<\/div>\n<\/div>\n
\n
\n
I’d shake his hand and to show you that<\/div>\n<\/div>\n<\/div>\n
\n
\n
we’re not just talking theory here we<\/div>\n<\/div>\n<\/div>\n
\n
\n
look back at the full 12-month period<\/div>\n<\/div>\n<\/div>\n
\n
\n
which led up to that trade we ran the<\/div>\n<\/div>\n<\/div>\n
\n
\n
twelve months prior to that trade in<\/div>\n<\/div>\n<\/div>\n
\n
\n
Priceline starting with the August trade<\/div>\n<\/div>\n<\/div>\n
\n
\n
from the year before so we could show<\/div>\n<\/div>\n<\/div>\n
\n
\n
you twelve full months and you can see<\/div>\n<\/div>\n<\/div>\n
\n
\n
the results the ten Delta call expired<\/div>\n<\/div>\n<\/div>\n
\n
\n
worthless eleven times out of twelve in<\/div>\n<\/div>\n<\/div>\n
\n
\n
the mid in the months leading up to the<\/div>\n<\/div>\n<\/div>\n
\n
\n
wind we were just bragging about in July<\/div>\n<\/div>\n<\/div>\n
\n
\n
of 2017 do you know anyone who would sit<\/div>\n<\/div>\n<\/div>\n
\n
\n
there eleven months in a row waiting for<\/div>\n<\/div>\n<\/div>\n
\n
\n
the big win in month twelve only a<\/div>\n<\/div>\n<\/div>\n
\n
\n
little only to look back and realize the<\/div>\n<\/div>\n<\/div>\n
\n
\n
whole campaign was a dismal failure and<\/div>\n<\/div>\n<\/div>\n
\n
\n
you actually lost twenty four hundred<\/div>\n<\/div>\n<\/div>\n
\n
\n
bucks even with that big win in the<\/div>\n<\/div>\n<\/div>\n
\n
\n
numbers and it makes sense if you think<\/div>\n<\/div>\n<\/div>\n
\n
\n
about it because the probabilities are<\/div>\n<\/div>\n<\/div>\n
\n
\n
90% that you’ll lose on this trade so<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll lose almost all the time so to<\/div>\n<\/div>\n<\/div>\n
\n
\n
make any money at all with this strategy<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ve got to beat those kinds of odds<\/div>\n<\/div>\n<\/div>\n
\n
\n
and so when you hear a guy bragging<\/div>\n<\/div>\n<\/div>\n
\n
\n
about his thousand percent return on a<\/div>\n<\/div>\n<\/div>\n
\n
\n
call option you’ve got to think about it<\/div>\n<\/div>\n<\/div>\n
\n
\n
a little bit you’ve got to think about<\/div>\n<\/div>\n<\/div>\n
\n
\n
the percentages the probabilities of<\/div>\n<\/div>\n<\/div>\n
\n
\n
that actually occurring and realize that<\/div>\n<\/div>\n<\/div>\n
\n
\n
it is miniscule and not worth their time<\/div>\n<\/div>\n<\/div>\n
\n
\n
as a trader in almost all the months the<\/div>\n<\/div>\n<\/div>\n
\n
\n
ten Delta call will expire worthless and<\/div>\n<\/div>\n<\/div>\n
\n
\n
you will lose 100 percent of your<\/div>\n<\/div>\n<\/div>\n
\n
\n
investment in that trade so by far out<\/div>\n<\/div>\n<\/div>\n
\n
\n
of the money options is almost always a<\/div>\n<\/div>\n<\/div>\n
\n
\n
losing proposition no matter how cheap<\/div>\n<\/div>\n<\/div>\n
\n
\n
or attractive they might look on the<\/div>\n<\/div>\n<\/div>\n
\n
\n
surface yes you’ll get an occasional<\/div>\n<\/div>\n<\/div>\n
\n
\n
spectacular game but you’ve got to make<\/div>\n<\/div>\n<\/div>\n
\n
\n
so much money on that one<\/div>\n<\/div>\n<\/div>\n
\n
\n
just to break-even that the whole thing<\/div>\n<\/div>\n<\/div>\n
\n
\n
is just about pointless so by now I hope<\/div>\n<\/div>\n<\/div>\n
\n
\n
that you see why we say that buying way<\/div>\n<\/div>\n<\/div>\n
\n
\n
out of the money call option<\/div>\n<\/div>\n<\/div>\n
\n
\n
is a trading blunder it’s a highly<\/div>\n<\/div>\n<\/div>\n
\n
\n
speculative strategy that’s basically<\/div>\n<\/div>\n<\/div>\n
\n
\n
got the probabilities of a lottery<\/div>\n<\/div>\n<\/div>\n
\n
\n
ticket and frankly they’re much better<\/div>\n<\/div>\n<\/div>\n
\n
\n
more consistent and sound strategies<\/div>\n<\/div>\n<\/div>\n
\n
\n
than going long some speculative a call<\/div>\n<\/div>\n<\/div>\n
\n
\n
way out of the money because you happen<\/div>\n<\/div>\n<\/div>\n
\n
\n
to have four hundred thirty five dollars<\/div>\n<\/div>\n<\/div>\n
\n
\n
that you’re willing to blow so please<\/div>\n<\/div>\n<\/div>\n
\n
\n
think about this don’t get lured into<\/div>\n<\/div>\n<\/div>\n
\n
\n
these spectacular sounding returns when<\/div>\n<\/div>\n<\/div>\n
\n
\n
in fact you’ll end up losing money if<\/div>\n<\/div>\n<\/div>\n
\n
\n
you employ that same strategy<\/div>\n<\/div>\n<\/div>\n
\n
\n
consistently stick with soundly designed<\/div>\n<\/div>\n<\/div>\n
\n
\n
strategies that work consistently and<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll become a better trader long-term<\/div>\n<\/div>\n<\/div>\n
\n
\n
that’s what the professional traders do<\/div>\n<\/div>\n<\/div>\n
\n
\n
and that’s what you should do if you<\/div>\n<\/div>\n<\/div>\n
\n
\n
want to trade options like a<\/div>\n<\/div>\n<\/div>\n
\n
\n
professional now just to remind you as I<\/div>\n<\/div>\n<\/div>\n
\n
\n
said earlier if you enjoyed this video<\/div>\n<\/div>\n<\/div>\n
\n
\n
and learn something valuable from it and<\/div>\n<\/div>\n<\/div>\n
\n
\n
would like to learn the details of three<\/div>\n<\/div>\n<\/div>\n
\n
\n
real-world option strategies that<\/div>\n<\/div>\n<\/div>\n
\n
\n
professional options traders use all the<\/div>\n<\/div>\n<\/div>\n
\n
\n
time then you should check out the free<\/div>\n<\/div>\n<\/div>\n
\n
\n
options class that we’re currently<\/div>\n<\/div>\n<\/div>\n
\n
\n
running just go ahead and click the link<\/div>\n<\/div>\n<\/div>\n
\n
\n
that should be appearing now at the top<\/div>\n<\/div>\n<\/div>\n
\n
\n
right corner of your screen that will<\/div>\n<\/div>\n<\/div>\n
\n
\n
open the free registration page in a new<\/div>\n<\/div>\n<\/div>\n
\n
\n
window so you won’t lose this video<\/div>\n<\/div>\n<\/div>\n
\n
\n
don’t worry<\/div>\n<\/div>\n<\/div>\n
\n
\n
or you could just head on over to<\/div>\n<\/div>\n<\/div>\n
\n
\n
options class comm to register for this<\/div>\n<\/div>\n<\/div>\n
\n
\n
free intensive workshop it’s really a<\/div>\n<\/div>\n<\/div>\n
\n
\n
rare opportunity for retail traders<\/div>\n<\/div>\n<\/div>\n
\n
\n
investors to learn directly from Wall<\/div>\n<\/div>\n<\/div>\n
\n
\n
Street traders but that’s exactly what<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll be getting through this free<\/div>\n<\/div>\n<\/div>\n
\n
\n
online workshop so click the link now<\/div>\n<\/div>\n<\/div>\n
\n
\n
and don’t miss it and please don’t<\/div>\n<\/div>\n<\/div>\n
\n
\n
forget to click on the subscribe button<\/div>\n<\/div>\n<\/div>\n
\n
\n
right now so you won’t miss the next<\/div>\n<\/div>\n<\/div>\n
\n
\n
episode of huge options trading blunders<\/div>\n<\/div>\n<\/div>\n
\n
\n
and all the other free trading videos<\/div>\n<\/div>\n<\/div>\n
\n
\n
that were constantly posting on our<\/div>\n<\/div>\n<\/div>\n
\n
\n
channel to help you improve your game as<\/div>\n<\/div>\n<\/div>\n
\n
\n
an options trader that’s our goal<\/div>\n<\/div>\n<\/div>\n
\n
\n
<\/div><\/div>\n<\/div>\n<\/div>\n

\"\"<\/a><\/p>\n

* no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

Today’s video continues our series on Options Trading Blunders and covers the fatal flaw in buying way out of the money, cheap calls on stocks. You’ll see a vivid example of the problems with this concept and how much money you’ll throw away by being lured into a program of buying cheap calls. * no relevant positions<\/p>\n","protected":false},"author":290,"featured_media":49564,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[4189],"tags":[],"class_list":["post-49563","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-free-daily-trading-video","post_format-post-format-video"],"yoast_head":"\nHuge Options Trading Blunders: $1000 Return on a Call | SMB Training<\/title>\n<meta name=\"description\" content=\"Learn from mistakes, as a trader shares their options trading blunders, and how to avoid them in the future.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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