Happy November, tradersβ¦
Jeff here.
Take a look at my October track record for my Burn Notice trades:
78% on DELL*
33% on DAL*
84% on DAL*
7% on DUK*
-12% on UBER*
25% on CCL*
11% on NRG*
27% on NRG*
89% on ARM*
7% on FSLR*
35% on UHS*
-4.7% on HMY*
76% on FSLR*
85% on MSFT*
-3.5% on MMM*
19% on TMUS*
6% on AU*
52% on ARM*
84% on AFRM*
19 trades. 16 wins with just 3 losses. All of these moves happen in 24 hours or less.*
I donβt post this to brag. Iβm sharing it to show you the power of consistency.
However, most options traders lack consistency because they go into the market with their eyes half-shut…
They find a contract, hit βbuy,β and hope it all works out.
Sure, they know what theyβre trading. But ask them why that trade should work or when the right moment is to make their move, and suddenly, theyβre quiet as a church mouse.
Yet those missing pieces are the difference between success and failure.
Iβve watched countless traders blow up their accounts chasing social media trends or gut feelings because they didnβt set up their trades with a purpose.
They had no solid reasoning behind why they entered or exited a position, and no timing strategy to help them stay on track.
If you want to win consistently as an options trader, you need to ask three simple questions before every single trade.
Iβm not talking about The 3 Tβs of Options Trading, The 3 Sβs of Options Trading, or The 3 Pβs of Options Tradingβ¦
I call these βThe 3 Wβs of Options Tradingβ: What, Why, and When.
Today, Iβll show you why these three questions are so critical β and how answering them could give you an edge that most traders can only dream ofβ¦
Step 1: The βWhatβ
The βwhatβ of a trade is the easiest part to figure out. All you have to do is determine the stock or position youβre planning to trade.
Every Reddit trader and their grandma (whose basement they probably live in) can find a βwhat.β
They might look at big names like Tesla or Apple because everyone knows them. Or, maybe theyβve done a quick scan and found a small, low-priced stock they think has potential.
But just because you know what youβre trading doesnβt mean youβre ready to risk your hard-earned money on itβ¦
If it was that easy, everyone would be a multi-millionaire options trader.
Picking a βwhatβ to trade is a bit like choosing a car. The make and model is important, sureβ¦
But if you donβt know where youβre going or how to navigate the route, it wonβt matter what kind of car youβre driving β¦ youβll never arrive at your destination.
You need the βwhyβ and βwhenβ before you hit that gas pedal, just like you do before entering any tradesβ¦
Step 2: The βWhyβ
So, youβve picked a name that you think could move big. βWhatβ next?
This is where most aspiring traders make a big mistakeβ¦
They donβt take the time to understand why this particular setup has the potential to pay off.
Thatβs because coming up with a solid βwhyβ involves real work β research, due diligence, analysis, and backtesting.
Most traders are simply too lazy to do the homework required to succeed. But trust me, itβs worth every second you put into it.
Your βwhyβ is the reason you believe your trade has a shot at success. Itβs your main argument for why this trade is worth the risk.
Letβs say you picked a stock because its earnings report is coming up, and thereβs buzz that the company might announce a major new productβ¦
Or maybe youβre positioning yourself in certain names around the electionβ¦
Whatever it may be, the βwhyβ makes you feel like youβre not just throwing a dart. It gives you confidence and conviction.
By determining a βwhy,β youβll have a well-researched thesis, which gives you a clear reason to hold steady (even if the trade isnβt going your way immediately).
When you skip the βwhy,β itβs easy to get nervous, sell too early, or βhold and hopeβ when the stock isnβt doing what you thought it would.
Iβve seen many of my trading students make this mistake, and believe me β it doesnβt end well.
On the other hand, great traders can explain why theyβre trading any given position in a few sentences.
Step 3: The βWhenβ
Now youβve got your stock, and youβve got a reason for trading itβ¦
This is where the trickiest part comes in: timing.
Unlike regular stocks, option contracts donβt give you unlimited time to get it right.
They have an expiration date, which means you need to be extra careful about when you make your moves.
Timing is everything in options trading. You might be 100% right about the underlying stock (and why itβs going to move)β¦
But if youβre a week too early or too late, your options will expire worthless. You might as well be 100% wrong.
On the other hand, this is why nailing your options timing can be so incredibly profitableβ¦
A few % points in the right direction could earn you a small fortune in a very short period.
Here are a few tips for nailing βthe whenβ:
- Check if the stockβs price is nearing historical support or resistance. Be careful with puts near support (and with calls near resistance)β¦
- Watch how the marketβs behaving that day. The trend is your friend, trade accordinglyβ¦
- Donβt buy strike prices too far out of the money (OTM). Pick a strike close to the current share price. The contracts will cost a bit more, but your chances of success will be much higherβ¦
- If you have a strong conviction that the move will happen soon, you should press your edge and buy weekly options. (For example, my Burn Notice trades are usually contracts with exactly one week remaining)…
- But for any trade where you have less than A+ confidence in an immediate move β or the chart is slower-moving β you should buy longer-dated contracts (a few weeks out or more)…
One more trick from my years on Wall Street: sometimes, no trade is the best trade.
Donβt feel like you have to enter every trade at the first sign of movement.
Trade like a farmer. Patiently wait until the conditions are perfect for a massive harvest.
Putting βThe 3 Wβsβ Together
Getting one out of the three Wβs right isnβt good enough. Just knowing what to trade β without a reason or the timing β is a recipe for disaster.
The βwhatβ without the βwhyβ leaves you feeling shaky about your trade, and the βwhenβ without the other two is just plain guessing.
Donβt hope the stock will go in your direction. Understand your stock, have a clear reason for why it should move, and pick the right contracts for your timeframe.
This isnβt a magic formula. Youβll still make mistakes, and some trades wonβt go your way. Weβre all human.
But if you focus on The 3 Wβs, youβll stop making snap decisions that lead to unforced errors and start taking complete control of your trading.
Youβve got the 3 Wβs β now go make some money.
Have a great weekend,
Jeff Zananiri
P.S. My brand-new algorithmic trading system has already delivered returns of 145% on QCOM, 235% on TECS, and even a staggering 900% on PBRβ¦*
If you want to start finding trades like these before they take off, youβve come to the right placeβ¦
This SUNDAY, November 3 at 9:00 p.m. EST, my buddy Danny Phee is hosting an URGENT LIVE EVENT where heβll reveal everything you need to know about my AI-powered GAMMA Code System.
Let AI help you find triple-digit trades β Click here to reserve your spot now!
*Past performance does not indicate future results
