written by reader My Super Big Expensive Embarrassing Mistake – The Big Trade from Stansberry

By dhb1313, March 25, 2020

The question for gumshoes: 1) if you HAD to spend $4K on Stansberry Research newsletters, which would you buy? Cuz, though I’ll surely try for a full refund, I’m likely only to get a credit and I CAN’t USE the newsletter I just bought, The Big Trade….

Short story: I succumbed to greed and fear in equally large portions, and spent, after all the teasers, $4 GRAND on Stansberry Research products three days ago. $2500 for The Big Trade — an options investing product — and more $ for additional years of same at reduced price. Digging into the materials, it seems I am literally INELIGIBLE to open up an options account anywhere. So I can’t even follow the advice they provide. I’m posting today partly as penance and a warning to others: you need at least 100 trades under your belt or previous options trading experience to open an options account at brokerage houses. My best guess (and it’s clear I do too much of that!) is that placing options trades over the phone through a broker will nullify most profits, even if I could find a broker prepared to submit the orders for a novice like myself.

Longer story: I’m a full-time caregiver for my Mom who has Alzheimer’s. The dip in the market scared me silly, because my chance of returning to work in a high paying job, at age 56 – 60 after Mom passes, having been out of (paid) work for (by then) 4 – 9 years looks pretty slim. I had planned, after Mom passed, to start a small online affiliate marketing business and live super frugally but my seed money was hit hard in the crash / crash-in-progress.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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blurg
Member
blurg
March 25, 2020 9:01 pm

I used to be a broker, why would placing your trades over the phone nullify the profits? Also, in about 3 months you can reapply for option rights. Just don’t say anything crazy like “now i have 10 years experience” because they do compare your applications.

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blurg
Member
blurg
March 26, 2020 12:35 pm
Reply to  dhb1313

oh ok, I thought you meant having a broker walk you through the option trade. Yea, that’ll usually run you $25 or so, so avoid that BUT brokers are usually happy to walk you through. What kind of options trades are they recommending? There are different approval levels and I can tell you which strategies you’ll most likely be able to do if you get approved.

Trucker MD
Member
Trucker MD
August 26, 2020 4:48 pm
Reply to  blurg

@blurg, Im interested only to start with buying Call/Put. If I succeed in that I will proceed with other strategies. Will I be approved after 3 months on Level 3 (Buy Call/Put) skipping Level 1 (Writting….) in Merril Lynch (ML)?
Thanks for sharing info BTW…..

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Trucker MD
Member
Trucker MD
August 26, 2020 4:42 pm
Reply to  dhb1313

, thanks for sharing your experience. Its very timely that I was deciding to transfer to another broker bcoz recent call to Merril Lynch said that I “keep on trading and gaining experience” and I was only granted Level 1 trading for Options w/c is to Write OPtions. Im interested only in buying Call/Put.
As a novice myself I think Options is better than stocks buy and hold in times of Covid. My subscription to IPO 3 months ‘trial expires Sept bfr I cant make a transfer. I wanted to trade OPtions myself. Its either Jeff Clark or Raging Bull. If I can be approved in 3 months to trade OPtions then I will opt out of IPOs. I will be retiring soon (2yrs) Thanks for sharing.

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Travis Johnson, Stock Gumshoe
August 26, 2020 5:15 pm
Reply to  Trucker MD

The idea of being two years from retirement and betting on IPOs, then moving that speculation to options, is mildly terrifying. I don’t mean to be patronizing, and I do allocate some of my funds to options speculating, too, but I hope you’re being careful and not risking a lot of your savings on speculations that have a high probability of going to zero (like most call option speculations, for example).

The bigger brokerage firms like Merrill Lynch seem to try a bit harder to protect you from yourself, most of the time — the little startups like Robinhood seem to give options trading permissions to anyone with a heartbeat, which has proven lucrative for some folks during this crazy year but is also likely to destroy some portfolios really quickly.

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Trucker MD
Member
Trucker MD
August 26, 2020 7:31 pm

I’ll be careful using MM 1%-2% on Options only. Ive seen their Index work like a Sine wave, so volatility will keep it from expiring worthless. You got plenty of expr and I believe u better. Thanks for the tips

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Trucker MD
Member
Trucker MD
August 26, 2020 7:33 pm
Reply to  dhb1313

, Its August now and how was your application for the Options acct??

๐Ÿ‘ 13
Trucker MD
Member
Trucker MD
August 26, 2020 4:32 pm
Reply to  blurg

@blurg, I just started with Merril Lynch last June 24th and been applying for Options Access and seen denials. I called finaly but they didnt mention 3 months. So I will be able to in 3 months not after 100 trades?? Thanks

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Travis Johnson, Stock Gumshoe
March 26, 2020 11:08 am

Thanks for sharing your experience. I can’t tell you which Stansberry letters would be more useful, but I’m sure there are some that folks like — the unscientific polling of those who have rated their letters in the past for us (results here) puts Dr. David Eifrig’s letters at the top of the list.

Please do be cautious about options trading even if you do get permission. Most options trades have a high probability of 100% losses, though some more complex trades build in a lower overall loss by selling contracts at the same time that you’re buying them. Options are not the way to “rescue” a portfolio, it’s true that some options trading can generate relatively steady returns if you’re a seller of options, not a buyer, but as folks who have sold put options found last month that can also wipe out five years worth of what you thought were steady “earnings” in a week if the market shifts dramatically.

The returns can be high, the leverage is certainly there, but if you’re swinging for home runs to “catch up” you’re also taking big risks of further losses. Be careful, especially if your first exposure to options is through an expensive newsletter — the tendency is to “buy in” because you want to justify your subscription, and if you don’t otherwise have a solid options education or background (it’s not rocket science, you can do free online tutorials on the CBOE website or read a book or two), it’s possible that any newsletter (I don’t know this one, just speaking generally) will underestimate the risks and overestimate the likely returns. Always assume that when buying an option the highest probability is that you will lose 100% of what you invested… and always remember that when selling an option, you can lose far more than 100% of what you anticipated as your return. Keep the losses in mind before you buy, and that will help you think about how much capital to put to work or put at risk in these strategies.

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Robert J Dannegger
Guest
Robert J Dannegger
April 6, 2020 1:34 pm

If you want to trade options go to Tastytrade.com and start learning for free. It is the best no BS option site that I know of. He also has a trading site called Tastyworks that is the easiest and cheapest to us that I know of. I’ve traded options at Fidelity and Td Ameritrade before moving to Tastyworks. Tof Sosnoff and his partner designed a trading system and sold it to TD Ameritrade for big bucks before starting Tsastworks with the lowest option commissions in the industry and have essentially forced lower prices throughout the industry.

Everybody trading stocks and their related options should learn from Tastytrade and trade at Tastyworks. Even if you have been trading for a long time you can learn a lot at Tastytrade.

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