MTI076: Options Trading with John Richardson

Options trading isn’t something we come across on a daily basis. Today’s guest is John Richardson. He explains how options trading can be a great way to enhance your portfolio and can be less risky than buying individual stocks. As he puts it, options trading can be a great hedge strategy for income by diminishing risk.

Watch a free training video John has made available for Money Tree Investing podcast listeners: ConsistentOptionsIncome.com/MoneyTreeInvesting

Our panelists tackle these questions:

  • Can an options strategy can enhance your portfolio. If so, how?
  • Why do you think investors in general usually lose money?
  • Has the investment industrial complex failed the average investor?

Some of our thoughts

Joe loves the insurance analogy used by John Richardson: You can use it to bat or use it like insurance. You can either sink a bunch of money into investments or buy an insurance policy (option) for a lot less to buy a bigger piece of the pie. He likes it for people with large portfolios who want to bring in a consistent income.

Miranda agrees with Joe’s position. She doesn’t personally use options but has written about them in the past. She raises a yellow flag to caution us that binary options moves more into the area of betting than hedging but can be good for someone with extra cash or a large portfolio.

Doug says you need to be active if involved in options trading. When he was a rookie on Wall Street, he dipped his toe into options trading. In the first week he made a couple thousand dollars. Woohoo! The next week he gave it all back – and thousands of dollars more. He has not met people who have consistently done well with puts and calls as long-term strategies.

Today’s panelists

 

For a quick bio of each of our show participants, head on over to our panelists page.