Is Options Trading Really Rigged?
If you've ever nailed the direction and timing on an options trade… only to still lose money, you’re not crazy.
In fact, you might just be a victim of how the options market is designed — or dare I say it, rigged.
Now, I don’t throw that word around lightly. But after a decade of watching how retail traders get chewed up in this game, I feel pretty strongly about it.
The scary truth is, the system isn’t broken — I often use that word but I shouldn’t. Because it is working exactly how the market makers want it to — and regular options are the bait.
Let me show you what I mean.
The “Hidden” Target You Didn’t Know You Were Trading Against
Let’s say Apple is trading at $230, and you think it’ll go to $235. So you buy a $235 call option. Sounds simple, right?
But what most traders don’t realize is that you’re not actually trading against the $235 strike. You’re trading against the break-even price — which might be $240, $243, or more, depending on the option premium. That means you could be right on direction, get a 3% move in your favor, and still lose money.
That’s exactly what happened in a META trade I broke down recently. The stock moved up exactly how we hoped — and the regular call option actually lost 16%. Meanwhile, my jump trade returned +194%. Same stock, same direction… but a totally different result.
How Jump Trades Flip the Script
Jump Trades are my antidote to this rigged structure. Instead of buying calls outright and hoping for a big move, I use a spread to define my target, reduce cost, and flip the risk-reward in my favor.
I did an entire free training on how they work during yesterday’s Opening Playbook.
We do this by:
- Buying a call one strike below our target
- Selling a call at the target price
- Setting a good-till-canceled exit as soon as we’re filled
This lets us trade inside the expected move — not beyond it. And that’s where the real edge is.
The Apple Example: 100% ROI for a Reasonable Move
Take Apple’s earnings this week. The expected move was around $9. Most traders were buying calls at $220 or higher, hoping for a big post-earnings pop. But that means they needed Apple to beat expectations and move nearly $10 just to make money.
That’s a losing formula.
I placed a Jump Trade instead: Buy the $212.50 call, sell the $215 call. Total cost? $1.25 per spread. Maximum value if it expires above $215? $2.50. That’s a 100% ROI — with just a $2.50 move required.
If Apple makes a big move, I still win. If it makes a reasonable move, I win. If it sits still? I lose, sure — but so does the regular call buyer.
The difference is that my trade required less and offered more in return.
Final Thoughts
I’m not saying Jump Trades are perfect. They still require the stock to move in your favor. But they remove so many of the hidden headwinds that make regular options so brutal. They let you trade smarter — not harder.
So… is the options market rigged?
Let’s just say it wasn’t built for you to win. But once you understand how it works, you can flip the script — and take back the edge.
— Nate Tucci
P.S. Get more information on how to utilize Jump Trades here!
No comments:
Post a Comment