With 20 years of experience with options, I’ve heard countless “traditional wisdoms” on options trading.
The reality?
Most of that advice may mean well, but is completely misguided!
Time to debunk these TOP 10 Myths!
Let’s dig in! ☟
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➠ MYTH #1: OPTIONS ARE FOR THE RISK TAKERS
σ Contrary to popular belief, options are NOT just for the daredevils of investing.
Options, considered by many as a minefield, can be strategic risk management tools.
Used wisely, they can cushion your portfolio against downturns.
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➠ MYTH #2: OPTIONS ARE EXCLUSIVE
σ Stop believing that options trading is an exclusive club reserved for Wall Street sharks.
It’s not.
With the proper education, a commitment to learning, and hands-on experience, ANYONE can join the party.
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➠ MYTH #3: NEVER SELL OPTIONS
σ The age-old debate – Buying vs. Selling options.
Contrary to popular belief, buying isn’t always safer.
Sellers, in fact, often have a statistical edge.
It’s not about following the crowd but understanding the dynamics of supply, demand, and time decay.
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➠ MYTH #4: IT’S ALL ABOUT HIGH VOLATILITY
σ The lure of high volatility – it’s intoxicating.
But remember, it’s not always a trader’s best friend.
Yes, it can offer opportunities, but too much can make your strategy tailspin.
Think of it as a double-edged sword.
Handle with care.
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➠ MYTH #5: Options Trading = Gambling
σ Stop comparing trading options to playing the lottery!
Success comes from analysis, risk management, and strategic thinking.
Not from taking fliers where you leave everything to chance.
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➠ MYTH #6: INSTANT PROFIT/GRATIFICATION
σ You must resist the allure of instant profits.
Success in options trading requires time, strategy, and patience.
Rome wasn’t built in a day, and neither is a profitable options portfolio.
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➠ MYTH #7: MORE TRADES = MORE POTENTIAL
σ “More trading equals more profits” – a dangerous myth.
Trading isn’t about quantity, it’s about quality.
Overtrading can lead to errors and higher transaction costs.
Focus on making each trade count.
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➠ MYTH #8: JUST FOR SPECULATORS
σ Options are versatile, not one-trick ponies.
They’re not just about speculating on price movements.
They can generate income, protect your portfolio, and add diversity to your investment strategy.
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➠ MYTH #9: BLACK-SCHOLES IS DOGMA
σ Trusting the Black-Scholes model blindly?
Time to change that.
While it’s a helpful tool, it doesn’t account for every market scenario.
Different situations call for other models.
Keep your toolkit diversified.
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➠ MYTH #10: OPTIONS ARE ALL THE SAME
Remember – options are like snowflakes.
No two are the same.
The underlying asset, expiration date, and volatility each shape an option’s character.
Understand these individual traits before diving in.
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➠ The New Rulebook for Options Trading
σ It’s about time we flip the script on options trading.
• Forget fast profits…
• Embrace learning…
• Sell more than buy…
• Handle volatility with care…
• Focus on quality…
• Use options as versatile tools…
• Consider various valuation models…
• And understand individual option traits.
Here’s to trading smarter, not harder!
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➠ By the way, don’t forget…
Right now, you can access ALL our research and trades FREE by using the code RV2023 at checkout.
➠ Just click the link below, select your preferred product, navigate to checkout, & enter RV2023 ↴
1 FREE MONTH TO OPTIONS INSIGHT!
You’ll then be set for an entire month of FREE macro research and trade ideas sent directly to your inbox.
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Thanks for making it this far!
Please share this with anyone in your life looking to learn more about options and options trading!
Cheers.
Imran Lakha
Options Insight
