Editor's note: In lieu of our normal fare, we're passing along an essay from our friend Dr. David "Doc" Eifrig, who explains how he became a stock market "magician"...
In my 20s, I became a magician.
I didn't perform at children's parties or on the Vegas Strip. Instead, I'd strut into the offices of CEOs and CFOs in New York and Boston and show them how to achieve investment results they'd never dreamed of.
Would they like to lock in prices for the materials their businesses needed? We could do that for them.
Were they worried about how rising interest rates or falling stock prices could affect their business? We could remove the risk.
Did they want to find ways to get stock market returns without buying any stocks or putting up less capital? We could deliver just that.
We did it with options. We could tailor a trade or a hedge to any market outlook. And we were paid crazy amounts of money to do it.
At the time, I thought we were playing the short game. Surely, once people found out how easy options were, the jig would be up. Our options techniques were too easy to keep secret. Soon, everyone would know about them.
Twenty-five years later... that never happened.
People still don't take the time to learn how to build wealth with options. Big corporations still go to Goldman Sachs and JPMorgan Chase and pay millions of dollars to have someone else put these strategies to work.
But the things that options can do truly are magical.
Whether you're a day trader or a retirement investor, you generally sit back and take what the market gives you. Yes, you try to think ahead and make some predictions. But once you buy that stock or mutual fund, you earn what they earn. Like a captain on a rudderless ship, you sail at the mercy of the wind.
In my decade on Wall Street, I learned that options let you bend the market to your will.
With options, you can take the same old stock market that everyone else is betting on and turn it into a consistent income machine. Or you can turn it into a casino where you place wild bets that could pay 100-to-1 returns.
You can design bets that profit when the market doesn't go anywhere, or that only pay off on the market's biggest days.
With options, you can design investments that conform to your desires for risk and return... not just take those that the market gives you.
And here's the biggest thing... it's easy.
Everyone tells you that investing is hard... that options are confusing... and that you'd better leave this to the pros.
I just don't believe that to be true. You have to take some time to learn a few new things – something many people give up doing in their 20s. And you'll have to use a little math – but not much more than basic addition and subtraction.
And you'll have to wrap your head around a few concepts – like volatility and time decay – that don't come naturally at first.
But boy, the returns for spending a little time to figure these things out will pay off for years.
I'm not exaggerating... I have put the same ideas I learned in my first six months of training at Goldman Sachs to use every day for the past two decades.
You only need to get a handle on a few fundamentals. You can apply them over and over again. It's like learning how to read. You spent some time as a child putting together a few basic concepts, and it has enriched your life to an immeasurable degree. Learning about options will do the same for you – in a way that is directly financially rewarding.
Whenever you have a stock idea, you can boost your returns by two times, five times, or 10 times. When someone at a cocktail party brags about a 100% gain, you can note that you make multiple doubles every month (or do what I do... and keep it to yourself).
Since my days as a young professional, options have fueled my career. After my decade on Wall Street, I went to medical school. That's a story for another day... But during that entire time, I traded options for extra income.
Eventually, I realized that while I could help one person at a time as a doctor, I could help hundreds or thousands of folks by writing and sharing my advice more widely. And given the stress that money problems can cause, by helping people with their finances I could make a difference in their lives and health.
That's when I joined Stansberry Research and started publishing the Retirement Millionaire, Retirement Trader, and Income Intelligence advisory services. I now author this course, Advanced Options.
Fortunately for me, I learned how to use options the right way. And that's what I help subscribers do.
Most people trade options the wrong way. They learn of options as a way to make a leveraged bet on a stock. And that's true. If you think a stock is going up, you can bet $100 (rather than invest $10,000), and if you are right, you can make 1,000% rather than 10%.
That sounds exciting... but it rarely goes so well. If you get it wrong, you lose all of your money. And very often, you get it right and you still lose.
That's because you don't just have a bet on the direction of a stock... You have a bet on changes in volatility and – as an option speculator – you have a bet against the passage of time.
Anyone who has celebrated a birthday in the past couple years can tell you that a bet against the passage of time doesn't tend to work out.
Even though most newbies trade options the wrong way, that doesn't mean options don't work. They do.
For one, in my Retirement Trader service, we bet against volatility. And we bet that time will indeed continue to pass. (We haven't been wrong on that one yet.) That's how we can boast a 94.5% win rate. We do that by selling options, rather than buying them.
That's not the only way to win, though...
There's another way to make options work for us. And it doesn't involve buying speculative calls or puts.
When we've got a good stock idea, we can bet on it moving in such a way that we make big gains with a better win rate than straight-up stock purchases. In another type of trade, we make money simply from the passage of time.
We just wrote a brand-new guide to show you these two trading strategies...
The first is a powerful way to bet on rising stocks. It can boost your returns much higher than a traditional stock purchase, while limiting the amount of capital you put at risk. It even outperforms traditional option trades in most cases.
The second turns the passage of time into a way to earn triple-digit gains with a high win rate. You can use it on stocks that you think will go up, but you can also use it on stocks you expect won't move at all.
I'm hosting an event on Wednesday, December 5, at 8 p.m. Eastern time, where I'll be talking all about these strategies. In the meantime, learn more about them right here.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Doc has found a way to quickly transform any stock into a potential triple-digit winner, boosting your returns while lowering your risk. On Wednesday, December 5 at 8 p.m. Eastern time, Doc will pull back the curtain on this strategy. Save your spot for this free event right here.
