Today I’m doing a review of Options University, where you can learn all about options, and how to trade them.
First, you might ask – why do I want to trade options? And what are the drawbacks to trading options?
Why trade options
There are so many reasons options are a good choice. You can increase leverage, limit your risk, provide insurance for other trades, profit in bear markets, profit in a market going sideways.
(Plus, the Oracle on Wilshire uses them, and we’ve had lots of questions about the trades using options.)
Option trading is very attractive for the small investor as it gives you the opportunity to trade a very large exposure for only a small amount of capital outlay.
Your risk is limited to the purchase price of the option, so if your analysis doesn’t match what actually happens in the market, you can only lose that purchase price, not more.
Here is a hypothetical example to illustrate the leverage possible. Suppose you and your friend Joe each decide to buy a Call for CTQ on May 1st.
Let’s say that on May 1, the stock price of Cory’s Tequila Co. (CTQ) is $67 and the premium (cost) is $3.15 for a July 70 Call. “July 70 Call” means that the expiration is the third Friday of July and the strike price is $70. The total price of the contract is $3.15 x 100 = $315. (We ignore commissions for simplicity in this example.) Note that to outright purchase 100 shares, you’d have to pay $6700. So you are investing in $6700 worth of stock for only $315. Nice leverage.
Because your analysis of this trade looks good, both you and your friend Joe buy a contract each.
Three weeks later the stock price is $78. The options contract has increased along with the stock price and is now worth $8.25 x 100 = $825. Subtract what you paid for the contract, and your profit is ($8.25 – $3.15) x 100 = $510. You almost doubled your money in just three weeks! You could sell your options, which is called “closing your position,” and take your profits – unless, of course, you think the stock price will continue to rise. So you close, taking your $510 profit. But, your friend Joe decides to hold. Here is what happens next:
By the expiration date, the price of CTQ drops down to $62. Because this is less than our $70 strike price and there is no time left, the option contract is worthless. Joe is now down by the original premium cost of $315.
To recap, here is what happened to yours and Joe’s options investments:
|Date||May 1||May 21||Expiry Date|
Okay this was a really simple example – there’s a lot more to it…
What are the drawbacks to trading options?
There are some drawbacks, such as lower liquidity, higher commissions, and time decay. Also, options are not available for all stocks. However, the most important drawback is that they are complicated. Options are very complicated to beginners. Most beginners, and even some advanced investors, think they understand them when they don’t.
And here is where Options University comes in:
Here is what Options University says about itself: “Options University is the leading source for options training, strategies, safer investing and better profits. We are an educational company teaching investors how to make consistent profits with options while limiting risk.”
Options University was originally founded in 2004 by Brett Fogle and Ron Ianieri. Courtney Smith, a long time trader, author and CEO of numerous financial firms is the new owner. The CEO of Options University is Steve Suminski.
Now I’ve never met Steve, but Courtney I’ve known for years. And this I know about him – he is very knowledgeable, very experienced, makes a bunch trading, and is passionate about teaching others to trade well. I’ve seen him teach, and he is clear, concise, and friendly and funny.
Courtney makes teaching videos, does webinars, and live events that are both fun and packed with information you can use.
And this is what one of Options University’s students had to say about Steve:
Options University offers courses for investors at every level. They offer online courses as well as live onsite training, and ongoing memberships and coaching and mentoring.
For beginners wanting an inexpensive but comprehensive training, there is Options Academy Starter.
At a more advanced level, Options University offers live, interactive trainings like Options Academy Online, as well as ongoing membership where you can learn the material in interactive online webinars and home study modules. You can also get coaching and mentoring, to be sure you are executing correctly (and profitably).
Options are complicated, but well worth your while learning, because the benefits of trading options far outweigh the effort to learn to use them well. And because our own Oracle on Wilshire uses them extensively, if you follow the Oracle, you’ll be happy you learned to trade with options at Options University.
They have many different course options (pun intended) for you to choose from. To really know and use options to the best advantage, one of their best courses is Options Mastery Online. And they are having a special 60% off price right now – I don’t know how long this special will be available. Here is their description of this online course:
What’s not so great about Options University?
Look, the main thing is, successful traders like you want to know how to trade options. Options University can give you great training. What’s not to like?
I’ll tell you what – you must spend a little money, and some time, some concentrated focused time, to learn how. That’s it. You must be dedicated to learning more.
I’ll close with another quote from a student:
If learning to trade Options looks attractive to you, click here to learn more about Options University.