What are Stock Options?
Stock options are contracts used primarily to reduce risk, giving the holder the right but not the obligation to buy a certain stock for a certain price by a certain date. Options expecting prices to rise are ‘call’ options; those expecting prices to drop are ‘put’ options. Key components of an option are the premium, strike price and expiration date.
What are Call Options?
Call options are contracts whereby the holder expects the value of the underlying stock to rise, thereby increasing the value of the option. Key components that make up the value of an option include intrinsic, which is the difference between the underlying stock’s price and the strike price. Extrinsic is the other main component, which is primarily the time value.
What are Put Options?
Put options are the mirror image of call options, whereby the holder expects the price to drop. As the underlying stock value drops, the put options increase in value, enabling in theory for the holder to sell the underlying stock first, then buy them back at the lower price. In reality, the idea is to trade the option rather than exercise them for the underlying stock.
Is option trading liquid enough to trade?
Absolutely, but that said, much depends upon the underlying stock and its options. Not all stocks have options and even some with options do not carry enough liquidity to ensure that you can sell your holding, should you be looking to sell. It is incumbent upon the options holder to trade intelligently, much of which comes from proper training.
How are options and stocks similar/different?
They both trade on the same broker platforms. Options are based on underlying stocks but unlike a stock, which you could buy and hold, options require a different approach. Options are contracts and include a time element, similar to ice cubes: they melt over time. The closer they are to expiration, the faster they melt. Profitable options trading requires a clear understanding of risks and rewards.
Options compare to other instruments how?
Options are the fastest growing financial instrument. Once available only to the pro institutional traders as a way to hedge their trades, options trading is now at the street level fueled by individual or retail traders. It continues to grow exponentially from its inception in 1973, when it was first introduced by the Chicago Board Options Exchange.
What about the $25k rule?
The Securities and Exchange Commission, in an effort to protect traders against themselves, instituted a rule that says you can only take 3 round trip trades in a 5 day period if you have less than $25k in your trading account. A violation of this may result in a suspension in your trading. You can bypass this ruling by opening up a cash account. Check with your broker. This rule does not apply to non-U.S. account holders.
Trading & Training Questions
Is training really necessary for trading?
Some brokers now require you to pass an oral test of your comprehension of options before enabling your account. While I cannot guarantee you will make money trading options, I can confidently guarantee that you will lose your money if you do not know what you are doing. Options trading is inherently risky and the risk of loss can be substantial. The decision is ultimately yours.
Do I really need to know about spreads?
You could if you want but it’s really not necessary. To just make money on the market, master one great strategy on one great stock. Learn its nuances and behavior to reap the benefits every day. Some folks, including myself, now only trade one stock, every day, for amazing returns. Keeping it simple is the easiest way for long-term growth on the market.
What are your 'one on one' courses like?
They are interactive, done live using GoToMeeting®. I determine your level of experience and fast track from there so we don’t waste time and money. Each session is about an hour in length and done at mutually scheduled times. After you understand the concepts, you will start with paper money, then move on to real cash.
What are your group sessions like?
Similar to ‘one on one’ webinars, they are held through GoToWebinar®. There may be a few, there may be hundreds. Either way, they are presented in a controlled environment where hopefully the majority of the group benefits, often feeding off each other. These sessions are about an hour in length and more economical as costs are shared…. a great way to get started. Like all our sessions, they are recorded and available for a limited time for your review.
Why don't you use textbooks?
The markets are dynamic. Strategies are fluid. Much of what I teach is unorthodox by others’ standards. No textbooks here; we use current data, live charts and as much real time information as possible. You need to know what is happening now, not in some theoretical sense but in practical terms. That said, you are issued eBooks for later review.
Do you actually trade your picks?
A lot of analysis goes into deciding what and when to trade. My picks may not be suitable for everyone and are subject to change. We each have varying levels of investment and risk tolerances. As markets can and do change at the last minute, I may have to adjust my trade. As a semi-retiree, I do not trade as much as I used to but I may make paper trades for demonstration purposes.
How do you determine your picks?
I use a series of indicators, some proprietary, some public, combined with years of tried and true professional trading experience. I offer individualized courses and webinars to show you exactly what I do. You can emulate our trades or find your own style, it’s up to you. But you should endeavor to learn so you can go to the market and take money at will.
Can you trade options in an IRA account?
With certain limitations, you may be able to trade options in your IRA account. It is best to check this with your broker as some may have differing policies on what is acceptable. While on the subject, check with your CPA regarding the tax handling of options trading. We do not dispense advise in that regard.
Do you trade anything other than SPY?
Hugh only day trades SPY these days. He does park some cash in some stocks that generally are well heeled and have seasonal movements, ensuring the fundamentals are intact. When you master one great strategy, you don’t need to look elsewhere.
What should I know about Live Trading?
You will be sent a GoToWebinar® registration notice the day prior. Check your Inbox by 7 pm ET the night before. If it is not there, check your spam/junk boxes and make sure your server is set to receive mail from us/Constant Contact. If you still do not have it, contact us at that time so we can resolve any technical issues. We are generally unavailable for technical support the morning of Live Trading. You will not be credited time if you fail to check for this important email.
Can I distribute your material to others?
No. All our material is copyrighted and none of it can be distributed by any means, electronic or otherwise to anyone without explicit written authorization. That said, we do make allowances for immediate family members to share our material for their personal use. Immediate family members are also encouraged to join in any webinars.
How does the self scheduling work?
It’s simple: just click on the link, pick your time zone and check the dates on the calendar. We provide 2 weeks out availability. Pick a convenient time and follow through the process. You should also be sent a GoToMeeting® link when booking your complimentary 20 minutes session. Make sure you have a functioning mic/speakers or headset and see you on line!
You trade only SPY. Why not diversify?
There is no more diverse stock than SPY. Financials, utilities, consumer discretionary, consumer staples, energy, health care, industrials, technology, telecom and materials are all included in this stock, with no one sector or company weighted so heavily as to influence the overall stock. Trading SPY eliminates the need for premarket sector analyses.
Risks to Consider
Can you lose more than your investment?
Yes and no. If you purchase straight calls and puts, you can only lose your investment in that purchase, should the options expire worthless. If you erroneously ‘sell naked’, you could lose your entire account balance and more, if called upon to inject more funds into your trading account to cover a short position. These scenarios are covered in proper training.
Do you ever suffer losses?
Absolutely. Anyone who tells you otherwise is lying. Losses are a part of trading and should be factored in to your money management techniques. Controlling your losses is key to your overall winning. I also teach how to limit your losses.
If this is so easy, why isn't everyone doing it?
A question I hear a lot… truth is, my technique, while simple, is not that easy. The emotional control, discipline and patience must be mastered. The actual technique can be learned fairly easily but to put it in practice can take some time and certainly some effort. I guide you throughout the process. For those reasons, most people would rather someone else manage their money.
What about liability issues?
a. Options trading is risky and losses could be substantial. Past performance does not guarantee future results and you should never trade more than you can afford to lose. You alone are responsible for your own trades. Always use proper money management.
b. We are not responsible for any claims on third party sources, such as web sites. Others may refer us, even offer descriptives of our services but they do not speak on our behalf. You must consult us directly in making purchases, especially as our offerings change from time to time.
What should I look for in a trainer/course?
Your success will depend greatly on your training. Find someone who is knowledgeable and can determine your needs and goals, effectively conveying the information in an empathetic way. You need to be comfortable with your trainer and feel good about the process, that you are getting a solid grounding and support. All this, at a reasonable price.
What experience do you have, Hugh?
I have many years in trading and life experience. Successful traders understand the two are intertwined as attitude and a grounded approach to trading is important for success. Anyone can learn the other technical stuff. Like the market itself, it’s all about harnessing expectations and controlling emotions.
Why are you teaching?
I love teaching others skills that can truly make a difference in their lives. Seriously. So many people attempt trading only to lose it all within a year. By teaching others, I too, stay sharp with the market. This rewarding occupation is also socially satisfying as teaching others ‘gets me out of the house.’
How is your course/service different?
With me, you are a real person with a name and real earned money. You will always be respected, the same way I would like to be treated. We do not coerce anyone into up sells or long-term commitments. We trade our strategy and display our results, something rarely found with other services. In addition, we use exclusive software we had written for our own benefit, now available to our clients. For a small cost, you be the judge and see why other services follow us.
Why I like TastyWorks?
TastyWorks® was released in January, 2017 by Scott Sheridan and some of the developers of Think or Swim. Always improving, their top notch charts and simulated trading is scheduled to be operational soon, at which time I expect we will transition over. In my opinion, executions are lightning speed and commissions are the best in the business. I support their business model in helping the retail trader, so it’s a great fit.
Why do you charge for Webinars?
I only want serious traders involved. If you have skin in the game, you will be more inclined to pay attention and learn. There is a free Introductory Webinar and even specials from time to time but for the material I teach, I paid very dearly. As it is, our services are more than fairly priced, many say even grossing under priced.
Why are other courses more expensive?
The fluff. True, there is plenty to learn but do you need to know how an engine works to drive your car? I could teach you everything, no problem and you will pay me. Some folks spend fortunes to learn strategies galore yet still can’t trade. With me, you will learn what you need to make money now.
What are the hidden costs/surprises?
The costs are what you will lose if you do not learn how to trade. This is serious business and there are traders ready, willing and able to take your money without even thanking you for it. There are no hidden costs to my training…. what you see is all there.
What is your refund policy?
Our material is proprietary and protected under copyright laws. Please be sure you want our services/collateral; for obvious reasons, we do not give refunds. Once the goods are sent, it is yours. Our services are well priced so your ‘skin in the game’ is minimal, should you decide to not pursue day trading. We do want you to succeed and will try our hardest to accommodate your training.
What if I don't have PayPal?
We use PayPal® because it is the standard in the internet world. You have a level of comfort knowing that you have a recourse through PayPal, should there be any issues. PayPal can be linked to your credit cards and bank accounts and they also provide loans. The alternative is to pay us direct to our corporate name, 10012011 LLC. If you do wish to transfer funds, contact us for the details.
Canadians: lower your commission rates
Canadians can get a discounted rate of $6.49 + $. 75/contract through a special arrangement we negotiated. This is one of the best rates available but you must be a subscriber/client and be referred by us. Let us know if you qualify.
Canadians: Exchange Rate Leakage
Canadians, when you make a deposit into your trading account, ensure that you tell your broker to keep it in U.S. funds. Otherwise, they may likely convert it back to Canadian cash at the end of the day, back to U.S. funds the following day and repeat this cycle daily, each time, skimming a little off the exchange rate. Eventually, your funds will vanish entirely.
Ready to Trade?
When can we start?
Right now. Send me your contact details and we’ll discuss the next steps. From knowing nothing to seasoned trading, I can improve your lot in life if you let me. We’ll start with basics, move to paper trading (pretend dollars) and when you’re ready, enter trades using real money for real profits.
What if I have more questions?
If your questions were not answered here, or if you would like to talk to me about a custom designed plan to make the program work for you, send me an email or through any ‘Contact Us‘ link.
Tastyworks, Inc. (“Tastyworks”) has entered into a Market Agreement with Day Trade SPY whereby Tastyworks pays compensation to Day Trade SPY to recommend Tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Day Trade SPY by Tastyworks and/or any of its affiliated companies. Neither Tastyworks nor any of its affiliated companies is responsible for the privacy practices of Day Trade SPY or this website. Tastyworks does not warrant the accuracy or content of the products or services offered by Day Trade SPY or this website.
Other great DayTradeSPY resources
Hugh’s Inner Circle
Stay in the loop with Hugh’s Inner Circle. Subscribers get a daily market analysis before the opening bell and evening follow-up with a screen shot of Hugh’s actual trades. Members are also invited to participate in our interactive Thursday night meet-ups, where we discuss the events of the day!
Headed up by the original developers of Think or Swim®, Tastyworks staff are very supportive and responsive to clients’ needs. Trades are delivered to the market with lightning speed; Commissions are only $1 to open, $0 to close*… and get this… commissions are capped at $10! (restrictions apply)
Hugh’s Trading Room
Interact with expert traders Hugh and Alex as they trade in real, live-market conditions. These morning sessions are fully narrated with the expectation of entering a trade, earning a profit and enjoying the rest of our day. This program is so vital to trading success that we include it in all of our masterclasses!