I will soon publish a book on trading options. The book advocates an approach to trading options that has been strongly influenced by tastytrade, a website that streams live programming every trading day on trading in the stock market. The approach that I recommend is pretty much opposite to what most option traders do. It is a "grind it out" approach that seeks trades with an edge. It is not a "get rich quick" approach. I believe it will generate a high percentage of winners, and it is reasonable to expect consistent returns of 1% to 2% per month. Such returns beat what you will get from most managed accounts (mutual funds, hedge funds, or financial advisors).
The approach is very similar to that used by gambling casinos to rake in profits every day. Think about gambling from the point of view of the casinos. How do they make money? They offer lots of opportunities for transactions, each of which provides a small probability edge to the casino. The maximum return on any bet is the size of the bet, and they restrict bet sizes. Sometimes the gambler wins, but the "law of large numbers" guarantees that the casinos will make money over the long run.
The approach recommends that, like a casino, you be a seller of options. It identifies 6 advantages that, together, provide a small edge to each trade. It recommends that you make a large number of small trades, and let the law of large numbers work to your advantage. And, like the casinos, you should be profitable.
If you have previously traded in the stock market you probably used such approaches as fundamental analysis or technical analysis to identify just the right stock and the right time and price to make a trade. The approach that I recommend does not require either fundamental analysis or technical analysis. You can make money in either an up market, a down market or a stagnant market.
