It was 1984 — my first week as a stock broker, when one day, a colleague collapsed right by the Quotron machine we all shared.
The man just fell flat on his face and was carted off on a stretcher, never to return to the bullpen.
It left me shaken and the whole office was in a somber mood.
But it wasn’t until I spoke to the owner of the brokerage that I found out what happened.
He said “Carter, options are a zero sum game…”
I didn’t know what that meant at the time, but it scared me off of options for a while.
In time, I came to learn that this co-worker had made the biggest mistake you can make…
He bet more than he could afford to lose. And he lost it all.
It was a tough lesson that took me years to fully grasp.
I Hate Losing
That was one of a handful of experiences I lived through that taught to hate losing in the markets.
So over the past 4 decades, I’ve learned to do everything in my power to tilt the odds in my favor as much as possible.
And for me, that means selling options.
Because I don’t need to be a stock picking genius.
I simply play the odds — and when you sell options, the odds are massively on your side.
To demonstrate this, I’m going to walk you through 3 trades I placed over the last few months.
In these examples, you’ll see that if I had bought shares of stock or bought call options…
I would have been left with a pocket full of nothing.
But — because of the very specific way I trade them — they resulted in winning trades.
Example 1 – XOP
On August 9th, I entered a trade on XOP.
I collected instant cash in my account in exchange for a promise to buy XOP if it dropped below 142.
In technical terms, I sold a $142 put.
But the best part about this trade is knowing exactly how much time we had to spend in the market.
And in this case, it was a shockingly fast: just 2 days!
The trade opened on August 9th and by August 11st, we had walked away with 9% returns.
Some people wait an entire year to get 9% returns from the market. We did it in 2 days.
But here’s what I really want to bring your attention to:
Take a look at the chart below showing how XOM moved over those 2 days. The stock had barely budged 0.3%.
And remember — in those same 2 days, we collected 9%.
Let’s look at another example.
Example #2 – RH
On November 29th, I entered a trade on RH.
Again, we knew how long we’d have to be in that trade.
In this case, our expiration day was December 8th — a total of 7 trading days in the market.
I expected the stock to go up… and it sure did.
But on the very last day, it suddenly plummeted.
This is a prime example of why I trade the way I do.
If I had bought shares or call options, I could have been underwater in a big way. A big loss.
But remember, I collect cash up front in exchange for a promise to buy the stock at a certain price.
Because I trade this way, the stock has to drop massively for a trade to work against me.
And even though RH fell 14% in a single day, that STILL wasn’t enough for this trade to work against us.
In technical terms, we sold a 235 Put expiring on December 8.
And that 14% drop still only took the stock down to $242.
So the option expired worthless for the buyer and we kept all the cash we collected up front.
All told, that was a 20% gain in just 7 trading days!
The chart below gives you a visual on how this worked out.
Example #3 – TSCO
Here’s a trade that just closed on Friday.
I alerted this trade on January 18th, for a trade on TSCO that would expire 6 trading days later, on January 26th.
The expectation was that the stock would rise. And it did for the first few days.
But then it started slipping.
Again, I’ll call your attention to the same thing I mentioned in the previous examples:
If I had bought shares of the stock or a call option, I would have been in the red.
But by collecting cash up front in exchange for a promise to buy the stock if it drops to a certain level…
I was able to vastly increase my chances of winning this trade. And this trade closed out as a winner.
In technical terms, we sold a $217.50 Put.
And even though the stock started slipping, it never came close to hitting that $217.50 level.
When this trade expired, we had gained 10% in just 6 trading days.
Here’s a chart showing the trade:
Closing
I hope I’ve shown you just how powerful this approach can be.
Curious to get in on my next trade? Click here and watch the video.
We’ll grab opportunities, manage risks, and trade the markets together.
Get ready to trade with confidence—let’s win this game together
Trade well,
Jack Carter