Options Traders That Don't Fail Have This in Common

08/20/2015 8:00 am EST

Focus: OPTIONS

Options expert Seth Freudberg, of SMB Options Training Program, explains that most options income trades usually have very high win rates but relatively lower levels of profit so it stands to reason that controlling the size of losses is critical to success over the long-term.

The data is in and the record is clear: Income traders who control the size of their losing trades are the long-term winners.

Having run our options trading desk at SMB since 2013 and having traded options income strategies for much longer...I can tell you that this simple truth proves itself over and over...on a regular basis.

Most options income trades usually have very high win rates—often 60% to 80% of the time—but relatively lower levels of profit per trade than other forms of trading, such as day trading or swing trading equities.

So with such high win rates, yet modest profits per trade, it stands to reason that controlling the size of losses in those minority of cases where these trades lose is critical to success over the long-term.

By Seth Freudberg, Director, SMB Options Training Program

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