The stock market is a guessing game.
And it is really easy to lose money.
When it comes to the stock market, less is more.
David Jaffee of BestStockStrategy.com knows that guessing direction is not the best way to earn money in the stock market.
Instead, he has taught more than 1,500 students to sell option premium and win 95%+ of their trades.
If that sounds too good to be true, keep reading to learn about making money in 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 know anything 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.
Once you have accepted this, 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 incredible returns is not based on your stock selection.
Instead, your strategy selection is the true key to success when trading options.
The options trading strategy you select should ensure that every trade you make has a positive expected outcome.
Do not try to guess direction to a point where 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 provide you with a solid foundational knowledge of the highs and lows of each stock, and how it tends to trade.
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 ~95%+ of your trades.
What is the best options trading strategy?
Is one options trading strategy better than the rest?
Through years of trading experience, David Jaffee has 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.
The only time option sellers lose money is when the actual volatility is more than expected, meaning the actual move of the underlying stock is more than expected.
You can earn 30-40% a year with minimum portfolio volatility by selling option premium and protecting yourself from outlier moves.
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 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 David Jaffee sells options, specifically naked options (when the VIX is high).
You can visit BestStockStrategy.com and receive more than $400 worth of free options trading educational materials about selling options.
You can even sign up for his online options trading course and real-time trade alerts to start successfully selling options from day one.
But, if you are not ready to sell option premium, David Jaffee can still teach you how to make money in 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.
This strategy can help you generate an incremental 5% - 10% per year depending on the strikes that you select.
If you would prefer to earn 30% - 40% per year instead, start learning how to sell option premium with David Jaffee.