By Jeff Clark, editor, Delta Report
The average option trader loses money. And it’s because they use options the wrong way…
You see, they use options for leverage – to get “more bang for their buck.”
The thinking is that instead of putting $10,000 into a stock that might go up 10%, 15%, or 20%… the trader puts $10,000 into an option on the stock with the hopes of making 100%, 200%, or more.
It’s the thrill of making fast, triple-digit gains that attracts most people to option trading in the first place. But while this sort of thinking might lead to a few big gains, it eventually causes enormous losses.
Traders blow up their accounts, lose a bunch of money, and then swear off options forever.
Don’t let that happen to you.
I’ve been trading options now for 36 years. And I can tell you, without any hesitation or doubt, if you want to make lots of money in the options market… then forget about the reward.
You need to focus on the risk.
Options are designed to reduce risk. So anytime you’re buying an option, you should approach the trade with the objective of limiting the amount of money you can lose on the position.