So the BIG question is this :“How do investors like us who trade options and manage our own money, generate income regardless of where the market goes? And do it all in a way that let us make time for the people and things we love and still get wealth or remain profitable.” This is the options trader mindset we are building…and this wil be the tagline of each Options Investing Update. It is the starting phrase of Optionalpha Daily Podcast. On my commute to work or back home, I continue to listen to the weekly and daily podcasts of Optionalpha.
This blog post is a new update on my Options Investing learning track. Let’s do some reflection on where I am with my learning. Am I on track to meet my objectives? What did I learn so far? What are the Key Learnings from the past months and what are my next steps that I can share with you…
My Learning Track
I made my decision to start learning options investing in May 2017. At the end of May 2017, I posted the blog post Why I decide to learn Options Investing ? which list out my main reasons for doing so. Read it please if you didn’t do it yet…it will allow you to understand how it can benefit you. I started the 8 week learning track of OptionAlpha.com and today I have completed 80% of this track.
Here is the document Fast-Track-8-Week-Options-Hacking-Guide
I did complete all daily and weekly podcasts mid of January but then I got sick and left it without any attention. Since I am back at work now, I started again listening to the podcasts. We are now at Daily podcast 168 and weekly podcast 118. During the coming month I will definitely catch up as I am only a few podcasts behind.
I have also followed an advanced Options Course with a Belgian options expert. Email me if you are interested about the course and I will pass on all contact details.
During the past month of January I also signed up for an options investing course of a 30y experienced Wallstreet US based options investor. Every wednesday evening she shares macro economic outlook and how this impacts her long and short term options investing. I can ask many questions and learn about her options investing strategies. I attended 4 classes so far and they have been really eye opening for me. Honestly I don’t like watching TV as I don’t learn anything from it. It is my personal attitude and mindset. Learning from the best and surrounding myself with experienced knowledgeable people that are successful, sets me up for possible success. Email me if you are interested about the course and I will pass on all contact details.
During Q4 of 2017 I did start with options investing and did sell covered calls. I made 1049,85 $ after three months. This definitely paid for the courses that I did follow so far.
Here I list out the past blogposts of my options investing journey :
- My Decision (May 2017) : Why I decide to learn Options Investing ?
- Getting Started (July 2017) : Options Investing : My Learning Track Update
- Learning the Basics (October 2017) : Options Learning Update : Building the Options Trader Mindset
My Key Learnings
Different Types of Options Investing Strategies
One important thing that I have learned during the past months, is the fact that there are many different options investing strategies and ways to generate cash flow out of the market. That is a great thing to know ! I made the following simplistic overview. I learned that investors buy options when they have a strong conviction about a directional move of the underlying stock or ETF or index. In a bullish market this is a simple investing strategy. When the underlying price goes above your strike price, you earn money.
The other strategy that investors apply, is the strategy of selling options. Here you act as an insurance company and you either deliver the shares (covered calls) at a certain strike price or you agree to buy the shares at a certain price (cash secured or naked puts). Credit spreads or iron condors are more risk defined and complex variants of the above strategies. Straddles, Strangles and Iron butterfly are other trading setups which you can apply. A lot of terminology, isn’t it? Learning options is like learning a new language…I do realize that. I speak 5 languages fluently today and I know each language has opened new doors for me. Learning options has opened new relationships and new insights about how to generate cash flow out of the stock market.
We will focus on the above 8 to 10 strategies going forward and learn how to apply them succesfully. It is important to learn when to use them so you have an 80% probability of success. Here is a bonus for you.
Listen to Podcast #141 – Which Options Strategy Has The Highest Return?
Listen to Podcast #144 – What Are The Best Option Strategies For A Bear Market?
Listen to Podcast#162 – How Many Different Options Strategies Should You Trade At One Time?
To build the Options Trader Mindset and continue the momentum of learning options investing, I have summarized my learning track as following infographic.
Books & Courses & Mentorship
Two weeks ago I purchased three new books and this week Amazon delivered the books. The three books are :
- Options as a Strategic Investment – Lawrence G. Mc Millan (5th Edition)
- Options Playbook – Brian Overby
- stock Market Cash Flow – Andy Tanner
The first book is like an Options Investing bible with more than 1000 pages. It wil lbe a great reference book to learn about a specific strategy in detail. The options playbook features 40 strategies in a very visual manner. I am a visual learner so this will help me tremendeously. The book Stock Market Cash Flow talks about the 4 pillars of investing and my interest goes mainly out to pillar 3 : Cash Flow generation.
On the courses front I will continue to follow the courses on Wednesday night and execute upon the mentorship of this Wallstreet veteran. I also subscribed for a 2 day course of Piet Van Noppen. You can find more information on the URL Master the Market.
As outlined above in my learning track, it is now important to master my trading platform. I opened an account at Interactive Brokers as I will mainly execute options investing in the US stock markets.
Now it is important to master the TWS platform and execute paper trading for the above listed strategies. How to execute paper trading ?
Listen to Podcast #129 – Please Stop Paper Trading Unless You Do This One Thing
Listen to Podcast #166 – Practice Paper Trading Like Scotty Roberts Plays Basketball
We will learn the execution of all above options trading setups including straddles and strangles as according to Kirk’s back testing those trading setups are the most $ profitable. We now will focus on executing consistent options investing setups in our paper trading account. Get familiar with the strategies that can build a small account is critical now.
We are committed to keep this learning track going ! We hope you learned something from this blog post and keep on following us on Twitter and Facebook. We will share our story as we progress on this investment strategy journey…and we hope to inspire you to take control of your money and make it grow.
Thanks again for reading and until next time ! As always we end this blog post with a quote.