With all the sites and seminars devoted to how to trade stock options, the need for advisory services is increasing all the time. There are countless of option advisory services that are run on a subscription basis. If the service is a good one they will enable you to trade options at a significant increase in your returns. Unfortunately, there are a lot of services whose main goal is to take your money and leave you with nothing but bad advice. Ultimately if you give your business to one of these services, you will likely end up losing money on your returns. But with scams abounding and good companies falling under the radar, how can you possibly tell the difference? There are a few signs of a questionable advisory services to trade options. If you see any of these things in the company you are considering, look a little deeper just to be sure.
If the company sounds just too good to be true. It is true that you can make a lot of money when you learn how to trade stock options. However, because options are leveraged capital then you can lose a lot of money too. Some companies will offer you gigantic sized returns for very little investment. This is just not the case. When you trade option, if you want the gigantic returns you’ll either have to take huge risks or be incredibly lucky. Be immediately suspicious of any service that implies or suggests you’ll be taking early retirement for very little cost. Legally they can’t come right out and make such a claim, but you’ll know the implication when you see it.
If the company references secrets strategies to trade options that only they, or the professionals, know about be very wary. It would be a lovely idea that there was one secret weapon to trade options that will consistently let you make easy money. But this is the real world, and those secret strategies just do not exist. Professional traders do use a lot of very advanced techniques and strategies, but they are hardly a secret. Anyone can learn these techniques and use them, although usually only the professionals do. If an option advisory service tells you this line of nonsense is hoping that you are new to options trading and that you haven’t figured out how to Google it yet.
When an option advisory service only offers you a list of call options or only a list of put options, you need to escape immediately. Simply buying a list of recommended options is a game for people who really want to lose their capital. This is the equivalent of spending your entire paycheck on lottery tickets; it just isn’t going to make you any money at all. Or, another example, a company offers you $2000 for every homerun you can hit and there’s no limit to the number of pitches you can swing at. This sounds like a great deal. But, the part they don’t tell you up front is that you have to pay $100 for every missed pitch. Suddenly it doesn’t sound like a good deal anymore. And this is the options way of doing just that.
While there is absolutely nothing wrong with a company touting their successes, you should be wary of a company that chooses one or two trades to show you what you “could have had”, if you signed on the dotted line. Obviously this would not represent all of the company’s trade options and would be very misleading. Read any promotional material with the utmost care. If the company uses this strategy there is probably a lot they are not telling you. Also along these lines is a company who does not tell you anything about their results or offerings or their process. Demand to see their track record. Demand to see their overall results. Demand to see something that can establish the required trust that you need to make a decision when subscribing. If they won’t so that, then you shouldn’t be giving them your business.