Options are no doubt one of the most versatile trading tools in the market, and Options trading is gaining traction. No wonder, you hear a lot more options trading success stories these days. But these are not just any run of the mill rags to riches stories. Despite its many gains, options trading involves significant risk, and the trader has to exercise a certain degree of discipline and trading acumen too. The type of personality and their attitude towards trading also influence their final results. Here are some success stories that can surely inspire you.
Blair Hull Makes the Most of Being At The Right Place At The Right Time
Addressed by many as one of the New Market Wizards, Blair Hull is best known for his financial strategies as an Options trader that catapulted him to success. Recognized for having executed one of the 40 greatest trades of all times and one of the 25 smartest traders, his net worth is at $400 million as per 2015 data.
He started working at 19 years of age. He started off with a position in a canning factory and later served the US Army as an instructor. Eventually, he went to Las Vegas and worked on the blackjack tables. From there, he made his way to CBOT in Chicago and then created his own trading algorithms that were applied in options space and led to his overall success.
He founded the Hull Trading Company in 1985 and sold it to Goldman Sachs in 1999 valued at $531 million. The firm is known as much for its quantitative new-age trading methodologies as for the reach and the speed. It trades across nine nations and twenty-eight exchanges. But he did not rest with that. Ketchum Trading was his next venture in 1999, and it facilitated trading in futures and options. The Hull Tactical Asset Allocation in 2013 was the latest and enabled algorithmic trading in an advanced manner in futures.
Follow him on Twitter here.
Hull’s Financial Strategies
Hull is best known for his trading coup in 1987. Though he built his electronic trading firm much after this, it is the trade that catapulted him to success. In his own words, Hull likes to think about it as an opportunity where “I was in the right place at the right time” But we do understand that it is his modesty speaking. He came across a panic-stricken trader during the Black Monday in 1987 when the market crashed. That trader offered him 150 futures contract at an unbelievable price and the rest, as they say, is history.
The twelve indicators are the core backbone of his trading strategy. This strategy is built on the premise that a specific collection of macro-economic indicators and technical pointers can help predict future returns over a medium-term period. These indicators are rather commonplace and easy to follow like the PE ratio, moving averages, inflation readings, and the like. This model operates with two core objectives, better the market indices and cut down the drawdown.
This strategy is back-tested every twenty days to improve its hit ratio. Most of these indicators are predictive to a certain extent and when combined can help you time the market, however improbable that sounds.
Pran Katariya – A Full time Options Trader
This is another well-known hero of popular options trading success stories who started as a Chemical Engineer and is also a Chartered accountant. His main trading methodology is about creating an income strategy that helps generate a steady inflow of funds for the investor for the maximum possible days. According to him, these income strategies can help one earn close to 2-3% every month, but one should not rubbish it as too small. When you take the per annum picture, these could aggregate to about 42% returns every year and this alone can help double one’s money in two years.
He began dabbling in shares early on and started full time in 2005. But, this was a period where he would trade for 2-3 months, lose more than 30,000, and then recuperate losses by not trading for a period. He realized something was amiss and undertook intensive training in the US.
It was here that he learned options and the common strategies that helped extract maximum gains. It also helped him gain a psychological edge. Once back in India, he realized that the strategies in India had to be adapted to be Indian conditions because of the margin policies. It rendered many of the otherwise successful international strategies useless.
Also Read: How to pick best stocks for Options Trading?
Why he Chose the Weirdor Strategy?
He focuses mainly on strategies that ensure steady income every month, and that is why Weirdor or the Jeep strategy is what he uses most commonly. The name is derived from the sharp pay-off graph that looks like a jeep.
Another advantage of the strategy is that the breakeven is wider, and the intra-day market volatility does not affect the trade that much. This is also a cost-effective and simple to follow strategy. Depending on whether the market is moving up and down, it is possible to make minor adjustments and come away with a 50-60% profit.
As a rule, he never waits for expiry and exits his positions at least seven days in advance. Most of his trades come with 80% winning assurance and he aims to encourage traders to avoid short-term trade. The objective is either not to lose or lose really small.
You can follow him in Twitter here.
Therefore, both these options trading success stories highlight the importance of disciplined trading practice coupled with a passion and deep understanding of the markets. It shows that an in-depth understanding is crucial for success and at the same time one needs to be extremely alert and agile in terms of the market dealings. Timing and speed are crucial for any successful options trade, and only that will bring forth a definitive amount of returns and provide sustainability to the trading module. Most importantly, every option trader who wants to pen down a successful story also has to learn to make informed choices.