My Story

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I have always considered myself a “savvy” investor. However, my track record would likely paint a completely different picture. I am the guy that turned $300 into $3,000 in a single trade.  However, it was my next trade that would be the most memorable.

 It is a great feeling to win! In fact, my best deal ever was a trade on American Airlines stock.  They filed bankruptcy and the stock had tanked.  I purchased shares for 25 cents, and in just a few months, the stock soared. I mean took off like a rocket. My initial $187 dollar investment had grown to over $4,000 dollars! Eureka!! I think I told everybody I knew how great I was at investing! I had learned how to win and I was going to turn my $4,000 win into $40,000 or at least that was the plan. As best I could figure, I had accidentally stumbled across an incredible winning strategy! Since, I made out like a bandit trading stock in a bankrupt airline, I figured that it would work for other companies going through bankruptcy. I guess that’s just the way my brain is wired. If the strategy works once, it should work again….. Unfortunately, that is not the case here. Buying stock in bankrupt companies turned out to be a terrible plan! Over the next few months I would go on to lose everything I gained and was down to a mere $87 dollars. I was broken in spirit and I had broken the bank. Although I didn’t make any money, I did learn that a poor trading strategy will eventually produce a poor man.

A Better Way to Trade

It was many years before I would attempt stock trading again. In the fall of 2018 the market took a turn and I saw an opportunity to get back in. This time I would be more careful and not repeat my earlier experiences. However, I just couldnt seem to time the market right. I always seem to get in late and out early, never making any money. Mid 2019 I was sharing my story with a dear friend. As we talked, he shared that he too was an avid trader. The only difference was that he was winning. And winning consistantly. I asked how he could be right 80% of the time. He said” That I should eat like a piranha instead of a shark. What? Piranha take lots of small bites, and sharks take great big bites. He then began to show me there was A Better Way To Play the Game.

 

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The strategy he shared is known as “Selling stock Options“. My Friend Tab, explained that the real winners in the stock market are not the Investors! Instead, the real winners are those “selling” the investors the “option” to buy or sell blocks of stock, called contracts. The “Option Seller” is paid a small premium when the investor “Buys” an option contract. The investor is then given the “option” or opportunity to buy or sell the stock at a set price at a set expiration period.   During the contract period, “if” the stock price moves the desired direction, the investor takes the stock and the seller keeps the premium that was paid initially. If the stock doesn’t go the desired direction, the the investor walks away and the option seller keeps the premium that was paid initially. This creates flexibility and leverage for the investor and an income for the option seller. Even if the stock price moves up, down, or sideways, the Option Seller will still usually make money.  I was hooked. I had to know more.

I began to learn everything I could about stocks and Options.  I learned that the stock market is like a See-Saw, it continually goes up and down. The investors are like the rider who make the see saw go up and down. Because the children are having fun, their excitement draws a crowd and soon everyone wants a turn on the see saw.  So thus begins the negotiations to get a seat on this great ride.

Using the same illustration, imagine the see saw with many riders lined up.  Now think about what would happen everyone gets off. Some is likely to get hurt.  This is also a great illustration of how the market works. Stock prices rise and fall based on the size of the crowd wanting a piece of the action. When the excitement dies down, the crown leaves, and often the stock price will fall, just like a seesaw. If everyone gets off one side all of a sudden, it will come crashing down

This See-saw illustration would become my guide in learning how to becoming successful trading in the stock market. The strategy is simple. To sell others the opportunity to get on or off the ride, while doing everything possible to stay off myself. I will further explain as I discuss how I successfully “Sell Puts” and “Sell Calls” for weekly profits.

PUTS AND CALLS – OPTIONS

What are puts and calls? In the trading arena, these are simply predetermined trade agreements. Take a look at the Option chart for PCG.

A $9.50 “Call” option is ‘in the money” if the current stock price is at or above the strike price of $9.50. Similarly, a “Put” option is “in the money“ if the current stock price is at or below the strike price of $9.50 .