Van’s Note: Van Bryan here, Jeff Brown’s managing editor. While our usual focus is on the latest tech insights, today we’re bringing readers a special edition of The Bleeding Edge with some unique insights from our friend and colleague Jeff Clark.
Jeff Clark is one of the best short-term traders I’ve seen in my years of financial publishing. But it’s his humility and thoughtfulness that truly sets Jeff apart and has endeared him to his readers.
And now Jeff has a very timely story to tell. His son just graduated high school in the middle of the COVID-19 pandemic. But by finishing up his year remotely, he got a chance to see his dad’s work up close… and now he wants to know how it all works.
And tomorrow night, August 26, Jeff plans to take his son’s newfound interest and give him a lesson on how to trade. And he’d like to welcome all readers to join him on this venture. Anyone who shows up will receive a free trading recommendation (including ticker symbol and exact instructions on how to place the trade), so this is not something you’ll want to miss.
By Jeff Clark, Editor, The Delta Report
Lately, I’ve been thinking a lot about how I started out my option trading career…
And that’s because my son, Carson, has been peeking over my shoulder as I’ve traded for the past six months.
You see, with me and my family in quarantine, Carson has had time to take a closer look at what I do each day. Plus, the recent market crash and recovery has attracted a bunch of new money to the market.
Carson has become a lot more interested in trading. Specifically, he wants to learn how to trade options. He sees the type of money that some folks his age are making on Robinhood… and he sees how well I’ve done for myself over the years. It’s enough to make anyone his age interested in making money trading the markets.
But I don’t want him to learn to trade from anyone but me. The market has taken on a wildly speculative fervor, and a lot of the principles of sound investing are being thrown out the window.
That’s why I recently decided to take Carson on a step-by-step walkthrough of how to place a trade in his own brokerage account.
Here’s the catch, though… It’ll be with his own money that he saved up from doing landscaping work in our neighborhood last year. Win or lose, I won’t be his safety net.
We’re going to broadcast the process to anyone who wants to join tomorrow, August 26, at 8 p.m. ET.
And in the meantime, read on to hear the story of my very first option trade, from when I was just about Carson’s age… and how I wish I’d had a mentor to guide me in that time.
I was only 19 years old when I made my first options trade.
I had a gut feeling the market was going to go higher… so I bought four S&P 100 call options at $1.50 – a total investment of $600. A few hours later, the options were trading at $4.50. I sold and took the $1,200 profit – a 200% gain. And I was hooked on options forever.
My next trade was in IBM. I bought 10 calls for $1. This time, it took a couple days to double my money. Next, I bought Digital Equipment put options… which nearly tripled in just a few days.
I made 17 trades during my first six weeks as a trader. Every single one was a winner.
Going 17 for 17 was a remarkable feat for a rookie trader – especially since I wasn’t using any sort of fundamental or technical analysis. I was just going with my gut. But I was careful not to put more than $1,000 or $2,000 into any single trade. And I still managed to turn my $5,000 brokerage account into $50,000 in just six weeks…
And then I decided it was time to get serious. No more tiny trades. I was too good for the small stuff. For whatever reason, I had figured out a way to beat the market. Heck, I had just rattled off 17 straight triple-digit winners. So I decided to take the $50,000 in my account, add to it my $25,000 in savings, and put it into a handful of options trades.
You can probably guess what happened next.
The stock market has a habit of humbling folks who think they’ve figured it out. For me, the humbling started right away.
At first, the positions started slightly moving against me. It was nothing to be concerned about. One good day would put everything back in the profit column.
But then, one by one, each position blew up on me. It was too painful to watch. I kept the television off and avoided reading the newspaper for fear I’d see something bad about the stock market and my positions. When I finally got up enough courage to call the branch manager and check on the status of my account, I learned all the gains I had built up over the previous six weeks were gone.
“Just sell everything,” I said.
That was an expensive lesson to learn. But it’s one every options trader learns at some point. I was just fortunate it happened to me early in my career.
You see, that experience changed how I looked at trading. Instead of using options as vehicles for speculation – a way to juice my returns and get more bang for my buck – I started using them the way they were intended to be used: as a way to reduce risk.
Today, I still do my fair share of speculating. But I’m not focused on how much money I can make. I’m focused on how little I can lose.
That’s a huge difference. It has allowed me to trade options successfully for nearly three decades. And it allowed me to retire at 42.
Best regards and good trading,
Editor, The Delta Report
P.S. Having a seasoned mentor at the beginning of my career likely would’ve saved me from that $50,000 loss. And now that I see how important and pivotal that is, I’m going to prevent a similar mistake from happening to my own flesh and blood.
To sign up for my free trading training session with me and my son Carson, just click here.
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