In last week’s The Rich Investor, I recalled part of my 30-year journey that led me on the path to becoming an options trading professional.
I started my career with some very entry-level jobs, but it was my seven years on the floor of the NYMEX that truly gave me the nuts and bolts of how option trading works from the ground up.
In the trading pits, it was the sheer physical nature of the game that was half the battle for success. College degree was less important than being big, strong, and loud. And in fact, many of the traders only had a high school education and/or were ex-athletes.
Surviving in the pits entailed standing for hours, shoulder to shoulder… being spat on, pushed, shoved, bumped, elbowed, and scrawled on as traders flailed their arms all… day… long. The bigger, the louder, and the more aggressive you were, the better spot within the pit you could command. And your physical proximity to the brokers in the pit (who stood on the top rung) was a key component of getting first crack at all the trades that would enter the ring.
Now, I’m the first to admit that I didn’t have all those physical attributes that could give me an advantage in the pit, but I did have a decent education, which was the other half of succeeding in that line of work. Where brawn failed me, brains helped me formulate the option trading strategy that would become the backbone of my Instant Income Alert newsletter.
I became acutely aware of how well an option-selling strategy could work, especially one that entailed selling put options.
I was amazed at how often option contracts would expire worthless, giving the option holder a full 100% loss on their investment. It dawned on me that the option sellers who took the other side of those trades were the ones who were winning — big time.
I wanted in on that action!
In late 1997, early 1998, the internet was making it extremely easy and affordable to get stock and commodity quotes over a computer, allowing anyone with an internet connection an opportunity to trade from any location.
So, I had an idea…
To enjoy the privilege of trading on an exchange, you must either be a seat-holder, or rent a seat from a seat-holder. I was a renter. And my last six-month contract was costing me over $8,000 a month.
What if I moved off the floor and traded from home? I thought… I would immediately save $8,000 on the first of the month. If I could replicate what I was making in the pits, I could see my income rise quite a bit.
Come to think of it, did I even need to stay in New York City? The internet was my escape route to work from possibly anywhere in the world.
It just so happened that my wife and I had visited the island of Kaua’i, Hawai’i just the year prior. We instantly fell in love and wondered at that time that if there was any way we could live there, we should try to make it happen.
So we did.
In the fall of 1998, my wife and I, along with our 15-month old daughter, took the plunge and made the 5,000-mile trek to a brand-new home.
It was there on that beautiful island that I would dive headfirst into off-floor trading, where I could combine my exchange-floor knowledge and apply it computerized trading.
It wasn’t easy at first. No sir.
I had to adjust to trading OFF the floor. I had to learn how to “read” charts so I could make educated guesses on which way the markets would move. But in the end, instant income was achievable, and once I’d mastered my new craft, I began sharing it with people like you.
I’ve written a book that focused on the four best option trading strategies that have served me well over my career. I’ve written to you about them often over the last few months. Remember them?
- Selling covered call options
- Selling option credit spreads
- Selling put options
- Buying deep-in-the-money call options
These four strategies have all had a place in my 30-year career, and I believe they offer the best chances and highest odds of success to any investor willing to put forth the effort.
If you’re interested, consider taking a look at my flagship newsletter, Instant Income Alert. And keep reading the emails from me once a week. My goal is to give you the power of instance income without the spit, shoving, and pen marks.