lnvacting Wtih Bradnon
70 posts


Retail investor: I tried options once. Lost 80% on a call in two weeks. Never again.
Me: What was the trade?
Retail investor: A 3 week call on an earnings play. Seemed like easy money.
Me: So you took the hardest trade in the entire options market... short duration, binary event, inflated premium... & concluded ALL options are bad?
Retail investor: ...I mean, that's what everyone around me was buying.
Me: exactly... you didn't fail at options. You succeeded at proving the gambling version doesn't work. Which I could've told you.
Retail investor: So there's a version that isn't that?
Me: The opposite in every way. SELL instead of buy. A year out instead of 3 weeks. Great companies instead of earnings lotto. Paid up front instead of paying for "hope"
Don't judge all of options by the gambling version most lose at...
You didn't fail at options. You failed at gambling. Good.
Sell portfolio secured puts... the version where time & odds are in your favor.
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Before I sell ANY put...5 boxes. All 5. No exceptions.
1. Elite company... moat, pricing power, competitive advantage
2. Valuation must be good
3. Strike ~10% below that. Discount on top of discount
4. A year+ duration... so EPS has time to grow
5. Ratios in check... my base could cover all assignments even after a 50% crash
This checklist is boring. It's repetitive. It's also why I've never been wiped out in 12+ years, while the "exciting" traders restart from ZERO every 18 months
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Retail investor: I always buy the cheapest options. Way out of the money. More contracts for my money.
Me: You know WHY those are so cheap, right?
Retail investor: ...because they're a better deal?
Me: no... Because they're are almost certainly expire worthless. Cheap contracts are cheap for a reason.
Retail investor: So I'm just buying lottery tickets in bulk?
Me: Essentially... 20 contracts of garbage... is just more garbage.
Retail investor: So what's the smarter structure?
Me: When I'm ultra bullish about a great company at a good price, I buy call contracts closer to the money & longer... LEAP calls with time/odds/& the companies fundamentals on my side.
Quality over quantity, always.
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