Myth #8: You have to spend thousands of dollars to get a good options trading education.
In the past, it was true that you had to either be in the securities business to get a good options education, or you had to pay a professional a lot of money to learn about the options game. All that has changed, however, with the advent of the Internet and the various trading platforms offered via the options brokerages we spoke with.
According to Wade Cooperman, “The breadth of education and access to education has changed significantly, allowing people to understand more about tools like options … There are just more opportunities for that today than there were 15 years ago.”
Tom Sosnoff says, “It was firms like thinkorswim that brought about another level of investor education. Basically, we saw the market moving away from traditional investor education as being a function of technical analysis to investor education being a function of strategy.”
The focus on investor strategy is the real difference between the new breed of options trading firms — firms dedicated to helping you execute trades and understand the strategies behind why those trades work.
Spending thousands on options education? Myth busted.
Myth #9: Trading options is a function of greed, and shows a lack of control by the individual inves
Rather than a function of greed or a lack of control on behalf of individual investors, trading options represents a very controlled and very rational method of adding value to an investment portfolio.
As George Ruhana told us, “They [individual investors] are going to be more personally involved in their financial decisions and their financial future. They’re not just going to outsource it to someone with a blank check because a lot of those people got hurt just as bad as an individual investor.”
Tom Sosnoff says, “Well I think [the 2008-2009 market decline] has given individual investors even more reason to be focused on their ability to trade. These are people that are managing their own capital. They’re not complaining that somebody else lost their money for them. They’re into it.”
Rather than simply relying on someone else to manage their money, individual investors who trade options use them to protect principal, earn income and, more importantly, increase control over their own money.
Greed and a lack of control? Myth busted.
Myth #10: Options trading is a fad, and trading volume will fall off once the market settles.
For those who still harbor the myth that options are a fad, we offer you the following thoughts.
“I think that people are going to start to take control of their finances just like they take control of buying their own airplane tickets, and just like they take control of a lot of things in life that they may not have done 15 or 20 years ago,” says Tom Sosnoff. This just means that more and more individual investors will continue trading options.
According to Don Montanaro, “If you look at the full universe of people in this country who have a relationship with a brokerage firm you are looking at 2% or 3% of those clients at most that have accounts that are approved for trading options. So, 97%-98% of people who have brokerage accounts and relationships in this country are not even approved for options trading. What’s neat is that because of a lot of the innovation in products over the last several years … that 97%-98% of people is becoming more and more aware of the existence of options and what they’re for.”
A fad, we think not. Myth busted!