Emma’s Note: Emma Walsh here, managing editor of the Diary.
As regular readers know, when it comes to his personal investment portfolio, Bill prefers hard assets such as gold and real estate. Things he can stub his toe on, as he says himself. Options trading just isn’t his thing.
The simple truth is Bill isn’t a trader. He doesn’t understand trading. So he doesn’t do it. But he knows some readers may want to do it. And he knows there are people who understand it… and who do it very successfully.
One of those traders is colleague Jeff Clark. With over 30 years’ experience, he’s now passing on his skills and knowledge to the next generation… something Bill is very much in favor of.
Read on below to find out all about how Jeff’s 18-year-old son, Carson, is going to put his own savings on the line to test his father’s options-trading strategies.
Lately, I’ve been thinking a lot about how I started out my options trading career…
And that’s because my son, Carson, has been peeking over my shoulder as I’ve traded for the past six months.
You see, with me and my family in quarantine, Carson has had time to take a closer look at what I do each day.
Plus, the recent market crash and recovery has attracted a bunch of new money to the market.
Carson has become a lot more interested in trading. Specifically, he wants to learn how to trade options. He sees the type of money that some folks his age are making on Robinhood… and he sees how well I’ve done for myself over the years. It’s enough to make anyone his age interested in making money trading the markets.
But I don’t want him to learn to trade from anyone else but me. The market has taken on a wildly speculative fervor, and a lot of the principles of sound investing are being thrown out the window.
No Safety Net
That’s why I recently decided to take Carson through a step-by-step walkthrough of how to place a trade in his own brokerage account.
Here’s the catch, though… it’ll be with his own money that he saved up from doing landscaping work in our neighborhood last year. Win or lose, neither I nor my publisher will be his safety net.
We’re going to broadcast the process live to anyone who wants to join on August 26 at 8 p.m. ET.
And in the meantime, read on to hear the story of my very first options trade, from when I was just about Carson’s age… and how I wish I’d had a mentor to guide me in that time.
I was only 19 years old when I made my first options trade.
I had a gut feeling the market was going to go higher… so I bought four S&P 100 call options at $1.50 – a total investment of $600. A few hours later, the options were trading at $4.50. I sold and took the $1,200 profit – a 200% gain. And I was hooked on options forever.
My next trade was in IBM. I bought 10 calls for $1. This time, it took a couple days to double my money. Next, I bought Digital Equipment put options… which nearly tripled in just a few days.
I made 17 trades during my first six weeks as a trader. Every single one was a winner.
Going 17 for 17 was a remarkable feat for a rookie trader – especially since I wasn’t using any sort of fundamental or technical analysis. I was just going with my gut. But I was careful not to put more than $1,000 or $2,000 into any single trade. And I still managed to turn my $5,000 brokerage account into $50,000 in just six weeks…
And then I decided it was time to get serious. No more tiny trades. I was too good for the small stuff. For whatever reason, I had figured out a way to beat the market. Heck, I had just rattled off 17 straight triple-digit winners. So I decided to take the $50,000 in my account, add it to my $25,000 in savings, and put it into a handful of options trades.
You can probably guess what happened next.
The stock market has a habit of humbling folks who think they’ve figured it out. For me, the humbling started right away.
At first, the positions started slightly moving against me. It was nothing to be concerned about. One good day would put everything back in the profit column.
But then, one by one, each position blew up on me. It was too painful to watch. I kept the television off and avoided reading the newspaper for fear I’d see something bad about the stock market and my positions.
When I finally got up enough courage to call the branch manager and check on the status of my account, I learned all the gains I had built up over the previous six weeks were gone.
“Just sell everything,” I said.
That was an expensive lesson to learn. But it’s one every options trader learns at some point. I was just fortunate it happened to me early in my career.
You see, that experience changed how I looked at trading. Instead of using options as vehicles for speculation – a way to juice my returns and get more bang for my buck – I started using them the way they were intended to be used: as a way to reduce risk.
Today, I still do my fair share of speculating. But I’m not focused on how much money I can make. I’m focused on how little I can lose.
That’s a huge difference. It has allowed me to trade options successfully for nearly three decades. And it allowed me to retire at 42.
Best regards and good trading,
Editor, The Delta Report
P.S. Having a seasoned mentor at the beginning of my career likely would’ve saved me from that $50,000 loss. And now that I see how important that is, I’m going to prevent a similar mistake from happening with my own flesh and blood.
To sign up for my free trading training session with me and my son Carson, just go here.
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