FAQs

Please note the following important points:

  1. All questions regarding margin and/or account allocation and/or any questions concerning your trading account are to be addressed to your broker as we cannot by law answer them.
  2. The editor, publisher and/or any of its associates/ representatives is/are NOT a registered and/or licensed investment advisor, and do NOT provide individual investment advice of any kind and/or any other advice.
  3. The editor, publisher and/or any of its associates/ representatives is/are not Hedge Fund or any other fund managers and do not manage anyone else’s money in any fashion.
  4. We are great believers in the timeless wisdom that one should spread one’s risk; what is commonly known as “Do not put all your eggs in one basket”. Of course the decision is always yours.

FAQs

I have never traded options before, nor do I know what they are and how they work. Can I still participate in the service and/or follow the suggestions?

We believe that one should know at least the basics of what options are and how they are being traded before joining WiseOptions®. To learn more about options click here.


How many and what type of suggestions are issued?

OptionsMAXimizer™:  The number of suggestions issued is not based on a monthly basis and cannot be guaranteed. However, we will attempt to issue on average 2 suggestions per month.

The goal for the average length of time for an open suggestion is about 60-120 days which may change with market conditions. Suggestions will include, but are not limited to: buying options, credit or debit call spreads, covered calls (either via a longer term option or the shares), credit or debit put spreads and/or naked puts to reduce the cost of shares or ETFs (similar to covered calls except that the shares are purchased ONLY if the naked put is assigned.)

Note: If a credit call spread is suggested and later a credit put spread is suggested (or vice versa) on the same underlying (index, ETF, stock) it may be considered as an iron condor and therefore one suggestion since no additional margin is required by most brokers. Talk to your broker for more information and/or details. Debit spreads do not require margin.

IncomeMAXimizer™: Same as OM except that IM suggestions will be primary selling puts and calls and credit spreads on Futures/Commodities.


How much should I allocate for trading?

This is something you need to discuss with your broker and/or investment advisor as we cannot give you any advice regarding this. It is common knowledge that it is prudent to diversify one’s investments and therefore risk. It is WiseOptions’ general view and/or opinion that one should not use more than 10% of available funds allocated for each investment and/or trade and/or strategy. Strictly for reporting purposes only, we use $5,000 per suggestion. The decision as to what amount(s) to allocate/use is strictly yours. Speak to your Investment Advisor or broker as to what is best suitable to you.


Are both OM and IM services appropriate for an IRA?

OptionsMAXimizer™:  To the best of our knowledge you can trade within an IRA but we suggest you check with your broker, investment advisor or tax advisor for verification and details.

IncomeMAXimizer™:  To the best of our knowledge you cannot trade options on futures/commodities within an IRA but we suggest you check with your broker, investment advisor or tax advisor for verification and details.


How safe are WiseOptions services?

It is a question of what one defines as “safe”. OM and IM success ratio is impressive, but it is not a certainty or 100% “risk free” as would be investing in a Treasury Bill (T-Bill). Losses can and probably will occur. Naturally, past results do not guarantee or reflect future results.


Is there any way statistically or practically to lose all my account in one go?

It all depends on your allocations. If one allocates 100% of available funds to one suggestion and it goes totally bust, then the answer is yes. If one allocate small % per suggestion then statistically (not certainty) the risk is low.


Is there a specific date that I should subscribe to receive the next suggestion?

You can subscribe at any time and you will receive the next suggestion.


What are the advantages of ETFs (Exchange Traded Fund) vs. Indices?

The biggest advantage of ETFs is that they are traded like stocks. Assignments are done with shares (not settled in cash like the indices) and are based on the ETFs closing prices at the closing of the third Friday of the options’ month. Therefore, there is no risk of the UNKNOWN “settlement price” such as the “SET” price for the SPX (S&P 500 Index). See what is the “Settlement Risk” below.

If one gets assigned on an ETF, one will buy (or sell short) the ACTUAL shares and therefore have a chance to sell (if long) or buy (if short) the assigned shares and therefore a chance to remove the loss (if any) or even make a profit. Since Indices settle in cash that is not possible.


What are the advantages of getting assigned?

Sometimes you WANT to be assigned and exercised in order to make the most gain. One of the potential suggestions used in OM is “In The Money” (ITM) debit spreads. Basically they work the same as credit spreads except that one has to PAY up front for the spread and there is NO MARGIN REQUIRED. The maximum gain on an ITM debit spread will usually occur when BOTH positions (legs or sides) of the spread are assigned and exercised.


What is the “SETTLEMENT RISK”?

Settlement determines the value at which the options are valued at the end of the contract. The SPX and most other major indices carries with it what I call the “SET RISK” (the symbol for the SPX settlement price is SET). Basically the SPX (and most other major indices) finish trading on the Thursday prior to the third Friday of the month, and the next morning (third Friday of the month) it is being valued for settlement (assignment price) based on a formula. Therefore, we have no idea, nor do we have any control as to what the SET price is going to be. For more info on how the SET is calculated. Here is the explanation from CBOE:

“Settlement Value”:
Exercise will result in delivery of cash on the business day following expiration. The exercise-settlement value, SET, is calculated using the opening sales price in the primary market of each component security on the last business day (usually a Friday) before the expiration date. The exercise-settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100.”


What is “Auto Service”?

Click here to find out more about Auto Service.


What is the difference between Stocks, Commodities, Futures, Options, Forex, and ETFs?

Stocks: A stock is simply a share in the ownership of a company. You can buy hundreds, thousands or millions of shares in a company through a brokerage firm.

Commodities: Mostly physical substance, such as food, grains, oil, and metals, which investors buy or sell, usually through futures contracts. The price of each commodity is subject to normal supply and demand. Examples of commodities are wheat, corn, lean hogs, gold, and heating oil. Other commodities include US Notes and Bonds and currencies.

Futures: A standardized, exchange-traded contract which requires delivery of a commodity, bond, currency, or cash (in the case of stock index). The contract includes the obligation to buy at a specified price, on a specified future date. Futures contracts are traded based on prices moving up and down as a result of mostly supply and demand.

Options: The options buyer has the right, but not the obligation, to buy (call option) or sell (put option) a specific amount of a given stock, ETF, commodity, currency, index, or debt, (the asset is called “underlying”) at a specified price (the strike price) during a specified period of time until expiration (the end of the time on the option contract). The seller of the option has the obligation to buy or sell the underlying IF the option buyer exercises her/his right.

Forex: Global market where world currencies like the US Dollar, Japanese Yen, and the British Pound are traded and their conversion rates are determined.

ETF (Exchange Traded Fund): A fund that tracks an index or an industry or a commodity (such as Gold), but unlike a Mutual Fund it is traded like a normal stock.


How can I fund my account?

You will need to check with your broker.


Are the accounts that I set up Margin accounts?

If you wish to participate in Credit Spreads and/or selling naked options your account will have to be a margin account AND at the correct trading level. Speak to your broker about all the details and requirements.


Can you guarantee I will make money?

Of course not. Trading involves probabilities but not certainties so a guarantee of profits isn’t feasible regardless of how good a system might look.

“You Never Fail Until You Stop Trying”

― Albert Einstein

“Any fool can know. The point is to understand.”

-Albert Einstein

“Great spirits have always encountered violent opposition from mediocre minds.”

-Albert Einstein

“Everything must be made as simple as possible. But not simpler.”

-Albert Einstein