Options FAQs

What is NGT options trading and what sets us apart?

We are the only just-in-time options signal service that we know of.  Every Monday and Wednesday, between 1:30pm and 2:30pm ET, we send our subscribers an email with more than 10 options trading signals from which they can choose to trade.  All of our signals meet our proprietary criteria, but we do not expect you to trade them all.  You can trade 10 to 20 open positions at a time, so you'd be trading only about once or twice a day, given that our average trade duration is about 10 trading days.

Not only do we provide signals to enter the trade, we also track all the open trades and send exit signals, like rollouts. 

We recommend at least $25,000 of trading capital for our system so that you can have the minimum 10 open trades at once.  Some options trading experience is recommended in order to execute our signals. 

Why use us?

1.  Our system rocks.  We aim for 25% to 50% gains per year.  This year we are doing far better than that.  See our Options Performance page.  You can read a little more about our system here.  We manage not only trade entry, but also trade exits, which are equally important.  You can about that on our blog here.  Options trading inherently involves a lot of risk, and we are not immune to losses, but with options selling we have the tools to manage them.  

2.  We are with you from beginning to end.  We don't just send signals and leave you to figure out how to exit the trade.  Exits are at least as important as entries.  Thus, we send exit prices along with our signals, and then we follow up if the trade ever needs to be adjusted or managed.  We provide signals on when and how to roll the option, if necessary, whether to exit at a different price, and so on.

3.  Personal service.   We always respond to your emails.  We don't use bots or sales agents.  If you have a question, ask us and we will answer you.  We want to get to know you and build a community here at NGT.

Is this too good to be true?

No, it isn't.  It is a myth that you can't regularly make returns of 15% or more or that you can't beat the S&P in the long run.  Sure, you probably won't get there if you only trade stocks.  Stock trading requires guessing which companies will succeed, when to buy them, when to sell, and so on.  With such trading, you're only as good as your guesses.  And since you're in a pool of millions of other people doing their best to guess right, you really don't have much advantage without hard work, education, experience, and so on.  Even then, most money managers don't beat the market as a whole.  

Instead, we sell options.  This kind of trading has nothing to do with investing in stocks.  We don't seek ownership in anything and thus we don't guess.  Our trades are based on identifying pricing inefficiencies in the options market.

How does it work?

Every Monday and Wednesday we send you an email with trading signals and any follow-ups on prior trades.​ We also send follow-ups or updates as needed on other days.

When the signals come in, you use your brokerage open a position for whichever options you select from our email.  You can choose as many or as few as you like, but we suggest trading just a few per day.  

We also give you an exit price right from the start.  After you open a new position, set a "good-til-cancelled" order at the exit price. 

Then you just wait.  About 92% of the time, the trade will automatically close at the exit price you entered.  You don't need to do anything.

Sometimes, about 7% of the time, we need to manage a trade with an options roll.  A "roll" is when you buy back the option you originally sold and then sell the same option further out in time.  We will send you a follow-up for these rolls if need be, so you're never flying blind.

And then about 1% of the time, we take a loss and move on.  

That's it.  It is really that simple.

What is options selling?

Options are like Legos:  they're very simple but you can do amazing and complex things with them.  There are two types of options and we trade both:  "call" options and "put" options.  A call option is a contract giving you the right to buy 100 shares of the underlying stock at a fixed price by a certain time.  A put option is a contract giving you the right to sell 100 shares of the underlying stock at a fixed price by a certain time.  The fixed price is known as the "strike" price.  All options expire by their expiration date, and you can exercise your option any time before then. 

Generally, when a stock price goes up, the price of call options tends to go up.  Puts are an inverse to calls.  When a stock price goes down, the price of put options tends to go up.

The thing about options is that you either make it or you don't.  If you own a call with a strike price of $30, but the stock stays below $30 through expiration, then your call option expires worthless.  If you own a put with a strike price of $20 but the stock stays above $20, then your put expires worthless.
 

Say AAPL is currently at $120 per share.  Calls with a $130 strike price that expire in a month are likely worth something, even though the stock price is below $130.  That's because people think the stock will rise above $130 by expiration.  This something -- the price of the call -- is called time premium.   If the price of AAPL stays at $120 for the whole month, the value of the call option will slowly decay to $0 at expiration.  Same thing with a $110 put; its price will slowly decay to $0 if AAPL's stock price stays above $110.​

So what?  This is how we win, that's what.  People pay a lot of money for options that end up expiring worthless.  Tens of billions of dollars per week of time premium are frittered away on people buying options.   So we win by selling options.  We sell time premium.  Over time, the premium slowly decays, but since we sold the option, that means profit. 

 

We sell high and buy low.

Why doesn't everyone sell options, if it is so lucrative?

We've thought about this question a lot and asked a lot of smart people, too.  We think there are three main reasons.​

First, it's hard to understand, and not everyone gets it.  It takes years of study and experience to set up the right trades.  Exit strategies are just as important as entries and these require yet another skill set, like rolling options out in time to avoid losses.  None of that is easy to understand.  Our friend once responded to this question by quipping:  "why doesn't everyone do calculus?" Exactly.

Second, it takes work.  We spent a long time developing this system, testing it, implementing it with our own savings, biting our nails to see if it would work (it did).  For our subscribers, every day we crunch through our screener, our statistical model, and our charts to generate the trading signals, exit prices, and trade management steps.

Third, rote thinking.  There are a lot of myths about options selling that we think are not really supported by facts but are instead simply passed around the community as well-known truisms.  For example, when it comes to selling put options, you often read "only sell puts on companies you wouldn't mind owning."  We often sell puts on companies we really don't want to own.  More than 90% of the time, we win, and for the rest, we can often manage the trade to avoid assignment.  If assigned the shares of a speculative company, then we have lots of other techniques for managing the position, including selling covered calls on the assigned shares (a trade called the "wheel").  You can read about this in our "Busting Options Myths" series on SeekingAlpha.com.

There are other reasons, but those are the biggies. ​

Why does your system work so well?

We identify options that have more time premium than is justified by the behavior of the underlying stock.  We sell when the premium is high.  We try to capture most of our profits in the first half of the remaining life of the option.  Rinse and repeat.

We limit exposure to losses by choosing option strikes that are far from the price of the underlying stock.  For calls, this is known as "deep in the money" because our option strike prices are much less than the price of the stock.  If the stock is at $120 and we sell a $60 call, the stock can fall 50% by expiration and we would not see a loss.  Similarly, we also sell put options that are way below the stock price.  With these "deep out of the money" put options, we reduce the risk of large declines in the stock price.  

We are able to find trades that provide enormous cushion with an outsized amount of time premium -- about 1% to 10%.  Because our average trade is around 17 days, rolling 1% to 10% profits every 17 days is, well, very profitable.   But we've done it.

Subscribe to our signals and you can too!

You only made $100 on the last trade.  What gives?

If you haven't sold options before, it's a bit weird.  Some trades only bring in $100 on a $5000 position, which seems like such a small take in the context to stock trading.  But that's still 2%, and if you do that every two weeks, that's a 50+% annual return.  They add up.

 

Our trades usually make only about 1% to 3%.  It won't seem like much, but just wait.  These trades occur frequently and they have a 90%+ success rate.  After two months, you will probably have made 20 trades or more.  Suddenly you've made $2000 by earning $100 on 20 trades.  Then you put that extra $2000 to work by adding it back to your trading principle.  Your earnings can compound.      

How much money should I put in your trade signals?

We recommend at least $25,000 of trading capital for this system.  Also, we recommend no more than 10% of your trading principle in any one trade.  Having 10 to 20 different trades at once is the best way to do it.  

Feel free to email us for any questions!  We will always answer you!