Investor Place

FREE Investing Newsletter

Get the hottest stocks to buy and sell every week.
Investors' Insights

Options

Get the Profit You Want From Options Trading

October 27, 2008

By Ken Trester, Editor, Fast Options Profits

Meet the Expert
Ken Trester

Ken Trester

As the nation's foremost professional options trader, Ken Trester is not just another "options educator."  He's a pro with 34 years of experience and a winning streak that goes all the way back to 1984 and money-doubling average annual profits since 1990.

More about this Expert

Email This

Psychiatrist Sigmund Freud posed: "The great question that has never been answered, and which I have not yet been able to answer, despite my 30 years of research into the feminine soul, is 'What does a woman want?'"

With more than 35 years of options trading experience, I only wonder, "What does the market want?"

My answer, I think, solves both Freud's dilemma and those of options traders, "Women and the market want what they want." And they will always get it.

That, in truth, is the best answer for those who pursue options trading, though, perhaps, not such a good one for those who are stock investors. But it does suit us perfectly, and it brings to mind that Rod Stewart song, "Some Guys Have All the Luck."

For months, I have counseled my Fast Options Profits subscribers to not worry about the market's indecisiveness or its lack of direction. As option players, we can profitably trade both bull and bear markets.

Sure, the 900-point jumps and dumps can throw some of us for a loop, but with our options trades, my Fast Options Profits members banked remarkable profits on the order of 140%, 159%, 172% and more during the weeks the market made its remarkable lows. (See also: "Options Trading: Just Do It.")

The simple fact is that options trading means we can make more money, faster and with more certainty during sustained directional moves, even if those moves are dramatic. The steady market decline during the past several weeks could have fattened your trading account several times over if you were options trading.

These 900-point bumps in the road are simply reminders that "the market wants what it wants." I could have no more guessed these bumps than what my wife wants!

Stick to the Rules and Profit

But as a professor of statistics and a veteran of options trading, I know that, while clear market direction (whether up or down) offers the biggest and most consistent profits, there are techniques than can enhance your over all returns.

If you're into options trading, I want you to follow these rules; if you do, you'll make more money, which is what everybody wants.

Rule #1: You Must Be Patient

As we've seen, this market is full of surprises so don't invest everything all at once. Decide how much you want to risk during the next year months and spread your purchases over that time.

Rule #2: Don't Be Greedy

The market has been very, very good for options trading, but…