The Secret Advantages of Trading Options

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Don't Bet Against the Odds, Bet with Them!

To put this in gambling terms, when we invest properly with options we are betting with the odds in our favor and when we invest in the cheap options we are betting against the house! In roulette the probability of hitting the single number is 1-in-38, or 37-to-1. Therefore, if you bet a $1 chip on this number 38 times you will win only once. The payoff for this bet is 35:1. So, the dealer will give you $35 and you also keep the dollar you bet. In total, after 38 spins you will lose two dollars that is 5.26% of 38 wagered dollars. So, the house edge on the single bet is 5.26%.

Suffice it to say that the house edge (market maker’s) in options is substantially better than that 5.26%! When you invest in the wrong options, you’ve really moved the odds against yourself. You’d be better off playing roulette in a casino, because they buy the losers drinks!

Since we all want to be long-term winners, you’ve got to invest with the odds in your favor. As I’ve shown, that doesn’t mean you need to be a math wiz, or computer genius to invest with the best chance of winning. You just need to avoid the chump bets! 

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