Can you make money trading options? (Review of Best Stock Strategy course by David Jaffee)
I began investing in 2017 in my early 20s. I started off investing in ETFs through a platform called Raiz (aka. Acorns in the US). It was a great way for me to get started in the stock market. I simply chose one of Raiz’s risk portfolio that I was comfortable with and regularly deposited money into my account every time I get my paycheck. This dollar-cost averaging approach served me very well — up til now I consistently earned over 10% p.a.
However, recently I decided to spend time to learn more about investing. In particular, I’ve been looking into options trading because, compared to trading stocks, it requires less capital to begin with and it allows a wide variety of strategies for people to grow their portfolio in any market conditions. You can make money with options whether the market is going up, down, or sideways, provided that you use the right strategy.
Content, content everywhere
Because there are so many ways to trade options it can be quite confusing for newbies to figure out what is the best approach to earning money with options. There are tons and tons of educational content on options trading on the internet, which is both a blessing and a curse. The upside is that we can get exposed to many different trading strategies and ideas. But it takes a lot of time to sift through vast amount of content and it can be hard to know which of those self-acclaimed gurus are legit.
I checked out several YouTube channels, including Options Alpha, ProjectOptions, and Drawbridge Finance. Then I came across David Jaffee’s Best Stock Strategy channel.
David Jaffee and Best Stock Strategy
Many people might overlook David’s content as his videos and website are less flashy compared to other educators out there. But I was struck by how insightful David’s videos were as I went through his YouTube channel. David explains complicated concepts in options with clear, simple language. He is very forthright in sharing his trading philosophy and personal views. David is also very transparent in sharing his trading statement which, in my opinion, greatly bolsters his credibility.
Above all, according to his trading statements and student testimonies, David is a very profitable options trader. He aims for around 40% returns per year, though he seems to consistently outperform his target (+117% in 2019).
David’s option trading strategy is pretty straightforward. In a nut shell, Daivd sells put options for large-cap, highly liquid companies when they are trading significantly below their historical average price. Basically, he makes money by selling ‘insurance’ for stocks that he expects will expire worthless (though he often closes his trades in advance to realize his gains early and minimize his risk).
David only sells options for large-cap market leaders when their stock price falls for several reasons: 1) it minimizes risks as price tends to be mean-reverting in the short run, 2) it allows us to collect more premium with increased implied volatility, and 3) it eliminates the need to spend time doing research as the price of large companies reflects all the publicly available information we have about them.
Focusing on just a few companies also means that David’s strategy doesn’t require a lot of time commitment: he says he spends only a few minutes scanning his watch list each day and places only 2–3 trades per week. With David’s strategy, you can make money trading options while holding down a full-time job!
David offers two paid services in addition to his free content: a $1,849 step-by-step course in which he reveals all the nuances of his options strategy, and a monthly subscription to his trade alerts for $349 per month (with a 7-day trial for $19).
Suffice to say these are very expensive services. But after digging into his background and statements I’m convinced that David is a credible guide. I can easily justify the price of the course if I could learn how to trade options well. I have certainly paid a lot more money for university subjects that turned out to be rather pointless!
Going through the course
The Best Stock Strategy course consists of 12 lessons in total. David sends out one lesson a day via email, rather than delivering all the information in one go. He explains that students learn better when they sleep on the information which helps consolidate their understanding of the material.
The course is quite comprehensive: it slowly progresses from covering basic terminology and concepts of options to setting up and managing your trades. The most challenging but valuable content were in lessons 5 to 8 where David shows you the mechanics of his strategy. They are very rich and are worth watching several times.
I found David to be an excellent educator. He is careful not to overwhelm his students with information. He cuts to the chase and only teaches the necessary concepts and practices to be successful in options trading. He boils down many variables (e.g. where to set the strike price or when to roll or close a trade) into simple questions to help you make better decisions.
David is also very responsive students’ questions. I sent him a list of questions I had after completing the 12-day course and he quickly responded via video message.
Overall I’m glad that I purchased David’s course. I’ve learnt a lot and now feel a lot more confident in trading options. I’ve been practicing on a paper account using his strategy and have been getting good results thus far.
Having said that, David’s strategy (or any trading strategy for that matter) is more an art than a science. Do not expect to come away with a formula that you can execute mechanistically. Even though David teaches you the first principles and proper mindset to make good decisions in trading options, it still takes experience to make the right call in various situations.
I suppose learning to trade options is like learning a sport: while I can learn the important principles to be a successful player from a coach’s instruction, I can only truly master the sport by jumping into the game. The same goes with trading. My ability to make good decisions in trading options can only be improved by real experience.
In summary, I think David’s trading strategy is solid. However, do not expect to master his strategy right away, especially if like me you’re a novice trader. As Emmett puts it in his review, “you will need to be exposed to more than just a few weeks of isolated market conditions. You will need to be exposed and have your hand held through some sort of market turmoil.”
I think people will need to commit to at least 3–6 months of David’s trade alerts service to ingrain his strategy. You should factor this time commitment and financial cost into your decision-making.
I’d also watch his videos and do plenty of research on him before purchasing his services. Here’s a link to all the reviews on Youtube I can find on David Jaffee. Here’s also a review of David’s course by scam-watch website TradingSchools.org.
Trading is not mere gambling, though no doubt many traders approach it as such! Rather, trading is a skill that can be mastered. And the path to mastering any skill is less challenging and cumbersome when you have mentors to teach and support you along the way. I believe David is a trustworthy mentor that novice and experienced investors can learn from.
Disclaimer: I am not a professional investor. I’m simply sharing my experience and opinion which should not be taken as financial advice in any way whatsoever. You should always do your own research before making any monetary decision. Also, I receive a small commission from the affiliate links above.