RJ Hamster
You Were Taught Options the Wrong Way
Delivering World-Class Financial Research Since 1999
An essay from Dr. David ‘Doc’ Eifrig… Options aren’t dangerous – bad teaching is… Leverage can kill… Why we sell options instead of buying them… The answer is steady income… More than 800 trades and a 95% win rate…
Editor’s note: Today, I (Corey McLaughlin) am pleased to share an essay from our Dr. David “Doc” Eifrig, editor of Retirement Millionaire, Income Intelligence, and Retirement Trader – and the CEO of our parent company, MarketWise…
As longtime subscribers know, Doc is a Renaissance man of sorts…
In the 1980s, he worked as a Wall Street trader before getting sick of the conflicts of interest he saw… Then he became a board-eligible eye surgeon and helped start a small biotech company, but eventually left medicine too for similar reasons…
Then Doc found a calling sharing his financial and health knowledge directly with readers with the power of the pen… and has done so for two decades like no one else in this industry.
Today, as our team takes time off for the holiday season, we urge you to hear him out on today’s subject – options…
As Doc explains, most people are scared of options, but that’s usually because they’re trading them the wrong way. There is a right way to do it – one that can deliver steady, safe, equity-like returns over the long run, with lower risk than owning shares outright.
Doc learned this trading strategy 30 years ago as a trader at Goldman Sachs, and he has taught thousands of subscribers to use it in all kinds of market environments. Yet most people still have never heard of it… We don’t want you to be one of them.
Just keep reading…
I (Dr. David “Doc” Eifrig) know just reading the word “options” is enough to make most of you stop reading.
I know that most of you probably know only enough about options to think they’re complex and risky. But that’s because you didn’t dig deep enough.
The first time you tried to drive a car, it probably seemed complex and risky, too. Now you do it every day. You put the time into learning how to drive because it made your life better.
Options will do the same for your finances. And just like learning to drive when you were 16 years old, better finances and larger income streams give you more freedom.
I don’t blame options skeptics.
I blame those who taught them options. Most folks get introduced to options the exact wrong way… as a way to make big, fast gains in the stock market. But when put into practice, this “big gain” tactic leads to big losses.
That’s why we take the opposite approach in my Retirement Trader service. We use options to reducethe risk of our investments while creating returns that don’t exist for other investors.
Today, I’m going to show you the right way to use options. If you choose to learn, please read on…
If trading options doesn’t scare you, does the word ‘derivatives’?…
Options are considered a type of derivative, a broad term for investments that are based on other investments. With derivatives, you don’t invest in an asset. Instead, you bet on a contract that “derives” its value from another.
During the financial crisis of 2008 to 2009, you couldn’t find a word scarier than derivatives. Remember hearing about those credit-default swaps that nearly blew up Wall Street?
Those were derivatives. They were bets that tied their payoff to the default status of mortgage bonds.
Perhaps you’ve read about rogue trader Nick Leeson blowing up Britain’s Barings Bank in 1995. He was using derivatives. Or Jérôme Kerviel, who lost 4.9 billion euros for French bank Société Générale with derivatives. And you might recall when a JPMorgan Chase trader known as the “London Whale” cost the financial giant $2 billion in 2012, again due to derivatives.
These guys give options and other derivatives a bad name…
They used them as a way to load up on risk and leverage, allowing them to make massive bets with little capital up front. Of course, their bonuses depended on taking stupid risks.
That has shaped the perception of novice investors regarding options… But it’s flat-out wrong.
With options, you can make a bet on whatever sort of market activity you expect.
A typical investor has two ways to play the market: He can buy stocks he thinks will rise or short the stocks he thinks will fall.
An options trader adds several more tools to his bag: He can bet that stocks will rise, fall, stay the same, move within a certain range, rise then fall, and just about everything in between. Options can be used to increase leverage and risk or, just as easily, to reduceit.
But most investors do it the wrong way…
The standard options pitch goes something like this…
Let’s say you think a $20 stock is going to rise. Well, you could buy 100 shares for $2,000. If the stock rises to $25, then you’ll have $2,500… a profit of $500 that gives you a 25% gain.
Instead, you can buy a call option on that stock for just $150. Since each option contract represents 100 shares of stock, your $2,000 investment now lets you “control” 1,300 shares (via 13 call options) instead of 100.
Based on the pricing of this particular option, if the stock rises to $25 within the month, it might turn your $2,000 into $3,250. That’s a 62.5% return. And your gains quickly multiply with every penny the underlying stock moves higher. Phew!
Who wouldn’t be interested in boosting returns like that?
The trouble comes with the first assumption. You may think a stock is going to rise, but when you trade options like this, you make a leveraged bet that a stock will make that move in a very specific period of time.
No matter your investing prowess, you’re going to get that wrong most of the time. And when you get it wrong as an options buyer, you’ll likely lose your entire investment.
People who learn to use options this way often lose their shirts on the first trade and quickly give up.
We have a better way…
At Stansberry Research, we love to earn higher returns, but we know that true investment success comes from obsessing over risk. In my newsletters, that’s what we do all day long.
In our different publications, we reduce our risk by employing the best analysts, focusing on quality and value, monitoring our position sizing, using bonds and other nontraditional investments, and using options to custom-tailor our returns.
In Retirement Trader in particular, our focus on risk lets us consistently make gains month after month, keeping our capital growing… and keeping our subscribers in the market.
We do it by doing the exact opposite as the folks who lose money trading options.
Let me ask you a question… Is poker a game of skill or chance?…
On one hand, you need to get great cards. You can make all the right moves but still end up busted by a straight flush. On the other hand, making careful moves and controlling your risk tends to pay off in the end.
People argue over poker because it’s hard to prove that skill beats luck. Over any single game, month of games, or even years, the best player can lose.
But here’s the question that settles it for me: Can you sit down at a poker table and intentionally lose all your money?
That’s a stupid question, right? Of course you can. The reason poker is a challenge is that everyone is pursuing the same strategies and the same ultimate goal. That competition makes any edge held a small one.
But when you take the opposite strategy from everyone else… it’s easy to succeed.
My options strategy makes it easy to reach your goal…
Now, obviously, we’re all about making money.
My options strategy flips the game so that we’re the only ones playing a certain way.
Here’s what I mean…
Most individual traders buy options. And most of the time, they lose money. Instead, we sell options… And we almost always make money. Over 15 years and more than 800 recommendations, 95% of our positions have ended up winners.
We’ve put together win streaks of 211, 108, and 136 consecutive trades. I expect our track record will only get better… And our current 80-win streak (and counting) could break new records.
That’s the key to our strategy. Selling something you don’t own sounds like an impossible arrangement. But it’s just the vocabulary that makes it confusing.
If you knew you could make double-digit returns in stocks… while reducing your risk… and could do so even if the market goes nowhere for the next few years… would you take the time to learn how?
My bet is you would.
The only thing holding you back is what I call “options baggage.” Options trading looks difficult, and many people have traded options improperly in the past and lost money.
Drop that baggage…
Keep an open mind, and I promise to show you that absolutely anyone can learn how to make conservative, risk-reducing options trades.
I’ve shown thousands of people from all walks of life how to do it over the years, even my own mother. And I’ve used this strategy myself to generate income and pay everyday living expenses.
I want you to be able to do it and collect $1,000… $3,000… $6,000… even $8,000 or more each month in extra income, as many of our subscribers have had the chance to do.
So, right now, I’ve decided to make it incredibly straightforward for you to try this strategy for yourself. You can get the full details here.
You can take the next three full months to try out in my Retirement Trader advisory, look things over, and still have the opportunity to change your mind.
But given the track record, I doubt you’ll find yourself wanting to do that. I suspect that after you try my favorite strategy, you’ll likely realize you don’t need anything else to consistently grow your income… in all kinds of markets.
So, give options a try – the “right” way. When you do that with Retirement Trader, you’ll get access to a host of educational materials that you can reference on your options journey… Plus, as we head into 2026, subscribers can access a report on my No. 1 stock pick for the new year.
Click here to learn more and get started today.
Recommended Links:
A Stansberry Celebration: 78 Straight Wins. A 95% Win Rate.
Would you bet on a 95% success rate? How about if that bet also had 78 wins in a row (with NO losers) spanning one and a half years… in THIS market? That’s exactly what Dr. David “Doc” Eifrig has just achieved… in his No. 1 all-time-favorite strategy. This week only, get the full details and claim your celebration “gift” from Doc right here.
2025’s Biggest Investing Story
He has been paid as much as $100,000 for a single research report. But soon, Joel Litman is closing the doors on the strategy that has already helped him lead his followers to nearly one 100% gain every month on average for the past 24 months, despite all the uncertainty and market swings we’ve seen this year (these are not back-tested results). If you’re interested in being part of what he’s calling “the single most important breakthrough in our business,” click here for full details before January 1.
Our team is taking some deserved time off around the holidays, so we won’t be sharing the 52-week highs, top open positions, and mailbag today. In the meantime, as always, send your comments and questions to feedback@stansberryresearch.com.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig, MD, MBA
Baltimore, Maryland
December 29, 2025
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