#95 - The Gift That Options Trading Gives To Individual Investors
Hey everyone and welcome back to the daily call. On today’s call, we’re going to talk about the gift that options trading gives to individual investors every single day. And so, hopefully you guys had a good holiday season or if you’re listening to this on the holiday season, hopefully you guys are enjoying it, spending time with your family. I always love it now with my kids because I get to excited obviously for all the holiday stuff and my wife really loves it, so it's a very fun time for us as well. But I think that it’s fitting to talk about probably what I think is the biggest gift to individual investors that trading gives and that’s that it gives individual investors a level playing field. I think if you really think about options trading and taking a step back today maybe as you’re listening to this and taking some time out of your day to listen to this that you think about how level the playing field is now versus how it was even like five or 10 years ago. The playing field is insanely level for options trading and the markets for you as the individual investor than it has ever been. With technology, with information, with social media, it is literally the ability to do the exact same trade and have the exact same characteristics as hedge fund managers, as professional traders, as anybody really in the market. You can do in the options market what anybody else in the options market can do. It’s all available to everyone. There’s no secret trading rooms. There’s no secret contracts that only they can trade and you can’t. It's all openly available. If you think about how level the playing field is that if a hedge fund or an institutional investor, etcetera can sell a bunch of contracts or buy a bunch of contracts and you could do the exact same trade with the exact same characteristics as they can, only just on a smaller scale because you don’t want to buy thousands of contracts unless you have the capacity to do it, but you can basically set yourself up right alongside of them. You can go shoulder to shoulder with them and do the exact same setup as them. That capability is insane if you really think about that. You can’t do that almost any place else in the entire world in the investing universe as you can in the options market. You can’t do it. In the real estate space, you can’t buy a small percentage of the same commercial apartment complex. You can’t do that. Maybe you could do it through a REIT or do it through something like that, but you can’t directly do the exact same trade just on a smaller scale than you can in the options market and that is truly the best gift that this industry has given to individual investors, giving us the ability to do exactly what we want to do, when we want to do it just like everyone else in the industry only in proportion to the size of our account, to the size of our balance. But that doesn’t mean it’s any less powerful. If a hedge fund or a financial institution or institutional investor takes a big position in oil or gold or silver or the markets or commodities or whatever, you can do the same thing if you want to. You can take a “big position” based on your account size in that same trade if you want to. It’s all a level playing field where you’re going to get paid out just like day we get paid out. We’re going to lose just if they were going to lose or whatever the case is in proportion to our account balance, but it’s the exact same setup. It’s the exact same probability of success, we’re both trading the same vehicle, we both have skin in the game in doing it and that is again, a huge gift to individual investors. I don’t think people realize how much the playing field has leveled over the last five or 10 years. Even just with the development of weekly options, the technology capabilities, the ability to get on, on your phone now and make trades from across the world is like nothing that we've ever seen before in our entire life. In fact, when I was trading and working in New York back in 2007 which is like 10 years ago or 9, whenever this podcast goes out, almost 9 years ago or 11 years ago, when I was trading in New York, the smart phones weren’t even out, the iPhone wasn’t even out, that wasn’t even a thing. In most cases, people had to call in to make trades. That was back in the days where Thinkorswim was just coming out and just becoming a thing. That shows you how far we’ve come in just the last 10 years and where we’re going to go. We’ve talked about this I think on Show 99 on our regular podcast on the weekly show. But we’ve talked about just the future of trading. If you think that the playing field is level now, it’s just going to continue to get even more level. It's probably pretty level right now, but it could be tweaked just a little bit more as we increase automation and obviously, introduce optimizers and back testing and things like that that have not really been available to most retail traders until now. We started introducing most of that and we started basically mirroring what institutional investors can do on a very large scale. Hopefully you guys take some time to think about this. Obviously, it’s a huge opportunity for us as traders. I hope you guys recognize the opportunity that's presented in front of us. It's a great time to get started or to keep going. If you felt like “Hey, maybe I need to reassess at the end of the year.” You just have to understand that this is a huge opportunity that you have in front of you and you don’t want it to slip through your fingers if you think it’s slipping away. Make the commitment now to double down on it next year and really, really put forth a game plan or an education plan that you can stick to and learn how to do this and generate some consistent income. Hopefully you guys enjoyed this. Enjoy the holiday season. Until next time, happy trading!
