Making Money From The Stock Market: The Beginner's Playbook

Making Money From the Stock Market

The stock market can be a guessing game. And it is really easy to lose money. When it comes to trading, less is more. We here at BestStockStrategy know that trading too often is not the best way to be making money from the stock market.

Instead, I have taught more than 2,500 students to sell option premium (and occasionally buy options too) and win up to 98% of their trades.

If that sounds too good to be true, keep reading to learn about making money from the stock market with less guessing and more confidence.

1. Assume Nobody Knows Anything.

If you are new to the stock market or you’ve been trading for a long time, it may come as a surprise to learn that almost all traders / investors don't have secret knowledge and they are also not special.

You should never assume that “gurus” or talking heads know more than you or have access to information you do not.

The current market price of specific stocks already reflects the available public information (which is why, despite working as an investment banker and analyzing financial statements all day, I don't look at the historical financials of companies).

Once you have accepted that almost all of the available public information is already priced into the stock, you can increase the amount of time you spend on things you enjoy.

David Jaffee encourages his students to do less research and take more action if they want to become a profitable trader.

Instead of spending hours watching YouTube videos, reading articles, and following the news, you can dedicate that time to learning a strategy that provides a statistical advantage.

2. Focus on Your Strategy.

Regardless of which strategy you use, focusing on your strategy is a major differentiating factor.

The best way to earn alpha and achieve large returns is to focus on your strategy selection when when trading options. 

The options trading strategy you select should ensure that every trade you make has a positive expected outcome (unless you're buying options and hedging your account or using a ratio spread to capitalize on direction).

When selling options, do not choose strikes that are too aggressive so that if the stock falls 5% then you'll end up losing a lot of money.

By selling option premium, you can make money even if the underlying stocks moves against you.

When traders buy stocks, they hope that it goes up – there is little strategy involved.

By focusing on the “flavor of the day” in the stock market, you put yourself at a higher risk of losing.

David Jaffee recommends creating a short watch list of stocks and following them closely. This will enable you to get comfortable with the highs and lows of each stock, as well as its recent trading range.

Your strategy should also incorporate a hedge in case the stock market corrects, so you can beat the market in all market environments (or at least lose significantly less money if the market corrects).

It is not feasible to expect to win every single trade, but the right strategy will protect you from large losses while also enabling you to win up to 98% of your trades.

What is the best options trading strategy?

Is one options trading strategy better than the rest?

Through years of trading experience, I've learned that selling option premium is the best stock market trading strategy.

Every single trade you make has a positive expected outcome when you sell options.

The expected volatility when selling option premium is almost always more than the actual volatility.

Option sellers tend to lose money when the actual volatility is more than expected, meaning the actual move of the underlying stock is more than expected.

You can earn ~30% a year with minimum portfolio volatility by selling option premium and protecting yourself from outlier moves (you'll protect yourself by purchasing options).

Even so, I do occasionally sprinkle in some directional plays using long calls and long puts or ratio spreads. Buying ratio call spreads on NVDA have been extremely profitable.

3. Minimize Your Portfolio Volatility.

It would be great to turn $2,000 into $2 million. Unfortunately, that scenario is highly unlikely.

It will also cause a great deal of pain and stress as you deal with the highs and lows of success and failure. The pressure and anxiety that comes with earning money and then losing money in the stock market is not worth it.

Over time, you will find that minimizing your overall portfolio volatility is a major contributing factor to the strategy you choose. If you can minimize portfolio volatility, you will have more longevity to compound your gains and drastically increase your account size.

4. Increase Your Income (Even if You’re Not Ready to Sell Options!)

It is no secret that I sell options, specifically naked options (when the VIX is high).

Here at, you can receive more than $400 worth of free options trading educational materials about selling options.

You can even sign up for my online options trading course and real-time trade alerts to learn how to begin to successfully trade options from day one.

But, if you are not ready to sell option premium, David Jaffee can still teach you how to generate income from the stock market. You can simply buy the S&P 500 or a large cap stock that you believe in and sell short-dated covered calls against that position - or you can run the wheel strategy.

The option wheel strategy can help you generate an incremental 5% - 10% per year depending on the strikes that you select. If you would prefer to target a return of ~30% per year instead, start learning how to sell option premium.

Frequently Asked Questions (FAQs)

How to make money in stocks? How do beginners make money in the stock market?

1) Select high-quality, large capitalization stocks with strong brands

2) Buy stocks when you believe they're oversold (you can also sell puts and take ownership)

3) If your options contracts expire, then continue to sell options on quality stocks or indices

Make money in stocks using options?

Options traders can profit by being an option buyer or an option writer. Options allow for potential profit during both volatile times, regardless of which direction the market is moving. This is possible because options can be traded in anticipation of market appreciation or depreciation.

Are stock options a good way to make money? 

Options can be a better choice when you want to limit risk to a certain amount. Options can allow you to earn a stock-like return while investing less money, so they can be a way to limit your risk within certain bounds. Options can be a useful strategy when you're an advanced investor

Can you make a living trading stock options?

Trading options for a living is possible if you're willing to put in the effort. You also have to control risk and ensure that you buy protective options when volatility is low.

Can you live off selling options?

The short answer is yes, but it completely depends on your portfolio size, risk management and risk tolerance.

Does Warren Buffett sell options?

Yes, he has sold put options.

You'd think that someone like Buffett who seems devoted to blue-chip stocks would steer clear of complicated derivatives, but you'd be wrong. Throughout his investing career, Buffett has capitalized on the advanced options-trading technique of selling naked put options.

About the Author David Jaffee

I (David Jaffee) help people become consistently profitable traders while minimizing risk. Learn more about our live trade alerts and courses. I graduated from an Ivy League University and worked at some of Wall Street's most successful investment banks. Subscribe to my YouTube channel for valuable videos - BestStockStrategy YouTube Channel​. My personal website is

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