Beware of hype
Sep 3, 2010

Beware of Hype

In the options world, there are many people who lie, cheat and essentially steal.  However, that's not different from almost any other business.

Often, it's a cinch to see who the phonies are.  For example, when you see someone advertising that they have an income-producing strategy that is guaranteed to generate 10% per month, anyone with a working brain understands that this is not a truthful statement.  Can you imagine anyone having such a system who would offer to share it with you for several thousand dollars?  No chance of that happening.  In fact, such a 'system' would be kept a deep, dark secret.

At other times, you discover well-known names who have been 'teaching' options for decades.  One would expect them to be honest - or at least to offer good advice.  In a recent blog post, I took one such options 'name' to task for simultaneously suggesting that people can make money in options by buying calls, buying puts, selling calls and selling puts.  That's actually a true statement.  The part he neglected to mention is that the trader must apply the correct strategy to the correct stock at the correct time.

That's a bit difficult to do.  What he's trying to do is to trap people into believing that options are cash machines and all one has to do is sign up for his (costly) newsletter to prosper.

The unethical players are out there.  So be careful when doing business with people you don't know.  I understand that you don't know me yet, but I intend to earn your trust by supplying lots of useful information - at no cost.  To that end, I'd still appreciate received questions from bivio members.

Mark D Wolfinger

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