Where Did All The Stock Options Traders Go?

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Stock option trading was hot until the Crash of 2000. Then the stock options traders disappeared. You simply didnÂ?t hear much about options trading anymore. (Losing traders tend to keep to themselves.) It turns out thereÂ?s a new breed of options traders that do things a little differently.

Before the crash of 2000 anyone could throw a dart at a tech stock or option and make money. That once in a lifetime opportunity is now a fading memory. Many pre-crash traders rode the NASDAQ up and then rode it right back down. Some are still waiting for the bounce that will never occur.

What are these former high tech traders doing now? Those that are still in the game have redirected their focus. The new millennium ushered in a new breed of trader that is focused on minimizing losses. That’s right -- a complete attitude reversal. One that’s much more humble. "Risk-adverse" is the new buzzword.

One little known strategy used by conservative stock options traders is what’s known in the trade as credit spreads. Credit spreads have less risk than owning the stock outright. And less risk than most other option strategies. The other side of that coin is that they have a cap on potential profit. Typically in the range of 3 to 9% a month. But hey, that’s OK. That’s much better than 0.1% a month in a savings account.

Many pre-crash traders are now back at regular jobs, once again. When do they carve out time to trade? Luckily this type of trading doesn’t require any more than a few minutes per day. Add to that an hour or so once a month to scan option picks and enter trades, and another hour at monthly option expiration. Much of this can be done outside regular market hours so it doesn’t interfere with the job.

New training courses have popped up that specialize in teaching this one strategy, to keep it simple for risk-adverse time-limited traders. One example is Stock Options Course in Atlanta. They have a weekend immersion course backed up with a year of support designed just for the new millennium trader. http://www.StockOptionsCourse.com

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Paul Quillen