Let’s face it…
To most everyday traders, the options market is nothing more than a casino.
They gamble a little bit of money at a time, buying cheap out-of-the-money options and hoping to hit it big.
Most times, though, the market wins. The options expire worthless, and the trade goes to zero.
That’s the risk we take when trading options. The trade-off for massive gains is quickly losing 100% of your stake.
But unfortunately, most who take this approach simply end up doing just that.
That’s why it’s a lot like gambling. It can be like rolling the dice and hoping for a big win.
I know this is true… Because when I first started trading, it’s exactly how I treated the options market.
For me, it was simply part of the learning process. You can’t really understand options until you’ve traded them and felt the burn yourself.
Eventually I developed multiple profitable strategies to guide my trading approach.
And during this process, I discovered one strategy that actually flips this gambling mentality upside down…
Instead of being a trader in the markets, looking for these wild bets to place…
We can sell those bets to other traders and collect a steady stream of cash.
We essentially become the casino… not the gambler. And you know the saying… “the house always wins.”
And it’s all thanks to a not-so-well-known options strategy… put selling.
How to Win on Practically Every Trade
Selling put options to other traders allows us to become the “house” in the stock market and practically win on every single trade.
With this mindset, when you look at an options chain, you see unlimited opportunities.
As I’ve talked about in Monday’s unusual options activity, there’s countless ways that you can use options to make money from the market. And the smart money is doing much more than just buying options in straight-cash bets.
Buying options has plenty of opportunities. But, when you turn to selling options, that’s when you can take your passive income to a new level.
That’s when you become the house for the stock market.
When you sell options, you aren’t spending cash hoping for big gains. You’re on the other side of the trade, collecting the cash… and winning practically every trade you place.
Think about it like this…
You know how all options have expiration dates?
They make each trade a ticking clock…
And with each tick, if your trade hasn’t moved the way you want it to, your option loses more value.
Now, think about what this is like for an option seller…
An option seller is EXCITED for expiration day.
When an option you sell expires worthless, you keep 100% of the money you received for selling it. The buyer, not you, loses out.
That’s what I mean when I say this strategy turns the gambling mentality upside down.
And by selling a put, the stock can go up, sideways, or even drop a few percent and you walk away with the exact same outcome. You don’t need the stock to move in any specific direction, or with any urgency.
Now, there is risk. I don’t want it to come across like we win 100% of the time.
But after nearly a decade of placing these trades, I’ve generated a 95% win rate.
Here’s the thing…
That win rate isn’t just because of me (even though I like to think I do a good job).
It’s because of the strategy itself.
Instant Cash… With a 95% Success Rate
We’ve been showing you lately that most strategies where you buy options don’t even need a 50% win rate to be profitable.
That’s because a few outsized gains can easily offset the multiple losses you’d experience.
Now, when you sell put options, your gains per trade will be smaller. It’s like batting singles and doubles instead of hitting for home runs.
But even with smaller gains, when you can win on 95% of the opportunities you find, it doesn’t take much to crush the stock market returns year after year.
That’s the real beauty of selling put options.
It’s a conservative strategy that allows you to beat the overall market year after year, while taking less risk than buying options or even simply buying shares of the stock.
When done the right way… and if you follow a simple strategy… these are no-brainer opportunities to generate what I like to call “instant cash” in the stock market.
That’s why it’s a lot like being the “house” for the gamblers in the stock market.
We can pick and choose from the thousands of available options, to spot the ones we want to sell to collect cash from the market.
Now, here’s why I’m telling you all this…
Next week, we’re running a three-day challenge to collect $1,000 in “Instant Cash.”
I’ll lay the groundwork behind Banyan Hill’s most consistent service, Pure Income. And walk you through how to collect $1,000 in instant cash, if you have $10,000 in your trading account.
The more money you have, the more you can collect. But even if you only have a few thousand, you can still collect income from these opportunities.
You don’t want to miss it. Click here to get all the details…
Chad Shoop, CMT
Editor, Quick Hit Profits
Chart of the Day:
Clear Skies Ahead for This
By Mike Merson, Managing Editor, True Options Masters
(Click here to view larger image.)
This daily chart of biotech company Abiomed (Nasdaq: ABMD) almost looks like a weekly cryptocurrency chart from last year…
After a huge run in late 2018, ABMD collapsed by more than 70% from its top in 2020. At the pandemic bottom, ABMD quickly snapped back and went on a great run, returning about 200%.
In 2021, the run stalled at the $355 level. The stock tested the level multiple times, only to falter and revisit the sub-$300 area.
Now, though, ABMD has breached the yellow horizontal resistance at $355, held up by the pink rising support line. And once it retests the first yellow S/R and clears the second, it’s blue skies ahead for this stock.
On a successful retest of that first line, I would get long call options with my price target at the next key resistance at $387.
After that is cleared, new all-time highs are likely in sight. And the company’s earnings report in late October might be the fuel it needs to get there.
Managing Editor, True Options Masters