PRICING, SERVICES AND GENERAL - COMMONLY ASKED QUESTIONS AND ANSWERS
SERVICES Q & A
Q: Is the Trade Notification Service scalable for accounts of all sizes?
A: Yes, the Trade Notification service provides plenty of optionality to pick and choose what trades you'd like make based on the notifications that are sent out to members. Additionally, these trades are scalable for accounts of all sizes as you can adjust the number of contracts as appropriate, whether it's 1 contract or 10 contracts.
Q: What does the Annual Membership tier offer?
A: The Annual Membership tier offers a more comprehensive package with Q&A via chat on strategy/trade related questions and a pre-built Excel file. The pre-built Excel file is a very valuable companion piece for options trading as this will save hours and hours of building out your own options-based ledger, embedded metrics and calculations. The Excel file tracks and trends all trades, calculates key metrics, graphs out percent premium capture and ROI per trade for clean and easy to understand metrics. See the Performance tab for examples of the percent premium and ROI metrics graphed out.
Q: What are the shared benefits of both membership tiers?
A: Both membership tiers come with the Trade Notification Service, members only videos (opening and closing custom put spreads and managing losing trades), Weekly Trade Ideas email and weekly metrics.
Q: How many trade notifications are sent out per month?
A: 15-30 trades per month on average with at least one notification per day and sometimes a cluster of notifications in a single day. It’s rare if I don’t enter a trade or close a trade on a daily basis and if there’s no trades placed then I send out a notification stating that no trades were placed for that day. See an example of Trade Notification Service.
Q: What is the average length of your trades?
A: ~15-20 days
Q: Is there additional content that comes with the Trade Notification service?
A: YES, in addition to the daily trade notifications, access to website permissioned monthly metrics reports, video on opening and closing custom put spreads and a weekly “Trade Ideas” email. The “Trade Ideas” email lists specific tickers that possess high IV rank and tickers that may be compelling trades based on 52-lows. Weekly metrics are also pushed out to all subscribers.
Q: What results can I expect from following the trade notifications?
A: Generally, you can expect to generate consistent income, winning ~85% of all trades placed and smooth portfolio appreciation. My goal is to outperform the S&P 500 on an annual basis with a much lower risk profile. Refer to the Performance tab for past portfolio metrics.
Q: Is there 1:1 engagement on questions regarding strategy, general trade questions, etc.?
A: Yes, specifically geared more towards annual members for more in-depth responses.
Q: What payment methods do you accept?
A: Any major credit card (Visa, Mastercard, American Express and Discover), credit card linkage via your PayPal account or PayPal directly.
Q: Can the trade notification service be cancelled at anytime?
Q: What brokerage platform do you use for executing trades?
A: I use Fidelity however I've heard good things about TD Ameritrade, Schwab, E*Trade and Robinhood. For international members, Interactive Brokers seems to be the go-to platform.
Q: What type of brokerage account are you using to execute trades?
A: All trades are place in my IRA
Q: Why do you prefer risk-defined trades such as put spreads, diagonal spreads and iron condors?
A: This opens the door to accounts of all sizes to utilize options as part of any overall strategy. This also enables traders to leverage a minimal amount of capital and maximize return on investment. Furthermore, allows traders to maximize the number of trades since capital requirements are minimal.
GENERAL Q & A
Q: How do I get started in options trading?
A: Obtain options trading approval within your brokerage account and educate yourself on the basic principles of options (i.e. calls, puts, strike price, expiration, premium, managing trades, delta, strategies, buy-to-close, out-of-the-money, etc.).
Q: Do I need a margin account?
A: Yes, when options trading approval is granted within your brokerage account, you'll receive a margin account. You will not be using margin to trade and will only be leveraging cash on-hand to engage in options trading. All trades are risk-defined via using cash that's available in the account. The brokerage firms categorize these trades as margin so these are placed in the margin bucket while the trade is active in the account. Once the trade is closed or the trade expires then these funds rotate out of the margin bucket and back into cash.
Q: How much money do I need to get started?
A: Minimum $3,000 - $5,000
Q: What’s the portfolio approach/strategy for a small account?
A: Risk-defined trades (i.e. iron condors and credit spreads) across uncorrelated tickers to maximize portfolio diversification and mitigate risk. Regardless of account size, the 10 Options Trading Rules must be followed.
Q: How many trades do I need to place on a monthly basis?
A: More trades the better, maximizing the number of trade occurrences increases the number of shots on goal and allows the probabilities to play out over the long term and through various market conditions. I personally place ~20-35 trades a month that comprises mostly puts with opportunistic calls.
Q: Why do you only SELL options and not buy options?
A: Selling options provides consistent portfolio income and a statistical edge for a favorable outcome without guessing which way the stock will move. When combined with high IV rank, the option premium income is even greater at any given strike. As volatility decreases in these situations and the underlying stock trades sideways, moves up or down without breaking through the strike price then gains can be realized.
Q: How much cash do you keep on-hand at any given time?
A: Roughly 25-50% to insulate my portfolio from any major downward move in the market in order to be agile enough to pounce on opportunities when they are presented (i.e. COVID-19). This amount of cash is also part of my comprehensive risk management strategy to running an effective options-based portfolio.
Q: Why don’t you just let the option expire to net the entire premium?
A: If there’s a 75-90% gain early in the option lifecycle then waiting until expiration doesn’t provide much added benefit to capture the remaining 10-25%. Also, the stock can move against you late in the option lifecycle and compromise your unrealized gains. If profits are on the table then realize those profits and re-purpose the capital for other trades. Accelerating the closure of these contracts also buys you time and allows you to place more trades.