Condor Options

You may have figured out by now that we’re not big fans of the mainstream media. Except, that is, when mainstream media attack mainstream institutional finance. In a recent piece from CNN Money:

A trustworthy planner should be able to tell you how he makes money off you. It’s the ones who constantly bleat “The client comes first” who worry me. To protect yourself, I suggest the following:

1. Always ask your planner to estimate your total costs and what benefit you are getting for it.

2. Ask if there is an alternative way to meet your goals that lets you keep more of your money.

3. Get the planner to put the above two answers in writing. If he won’t, ask yourself why.

4. Always know what you are buying. As a general rule, the more complex it is, the worse it is for you.

In short, nothing, especially good financial advice, is ever really free, so if you can’t figure out how your broker or advisor or planner is making a profit, then chances are he/she/it is screwing you somehow. This advice applies to options trading just as much as it does to IRAs and 401ks. Decent option trade ideas are never free, and free option trade ideas are never decent.

(Well…almost never. We did send an alert out to members of our iron condor trading service and to readers of Condor Options Reports on July 17 that did pretty well. By “pretty well” we mean that it returned in excess of 30% the very next day. But I digress.)

Just in case you’re wondering, “Do these guys practice what they preach,” consider our answers to those four important questions above. It should be noted, of course, that we’re not professional financial planners, for the simple reason that sitting at a desk all day trying to hawk crappy mutual funds and variable annuities to innocent investors isn’t our idea of a fun way to make a living. Anyway:

1. Total costs: the total costs of trading with us are about as obvious as it gets: $99/month for a membership (that is, if you can get one), plus commission costs at your broker, which should be minimal.
2. Alternatives: well, of course there are alternatives to us, and some of them might even make you money :) But none of those alternatives will beat the market averages, beat the mutual fund industry, outperform buy-and-hold conservatives, outperform CNBC Booyah crazies, and reduce portfolio volatility like our market-neutral iron condor strategy. Enough boasting.
3. Put it in writing: we just did.
4. Complexity is bad: True enough. That’s why we trade one strategy and trade it according to well-tested rules. What’s that you say? Iron condors are complex? Well, they’re not for children, sure, but understanding an iron condor is certainly easier than learning all the ins and outs of interest-only 3/1 ARM mortgages, and people don’t think twice about buying those (though they really should). Seriously, if you can play poker or chess or do long division, you can understand iron condors easily.

And that does it. You don’t have to “trust us,” now or ever, because we know we’re only as good as our next trade. And we’d rather rely on our record any day!