Opinion Versus Fact! – Options Education

SECOND OPINION | Non-Hodgkin's Lymphoma | PBS

Many people in the You Tube fraternity are driving themselves crazy with puzzled frustration about a new phenomenon. Magibon – the young woman who makes a short video of herself doing nothing, and saying nothing – and gets a million views in a week? What is occurring here? Just what is the secret of the Magibon phenomenon?.

I decided to investigate, and this article is the first installment in my investigative report. I believe I have cracked the 'Magibon Code' as you will see. I believe there are many facets to it, and the quest to find the answer will take us into many areas of human nature, and also the nature of the internet.

Let's say that you purchased an OPTION at $1 per share. On that very same day the market moved in your direction and you were capable of selling that option at $1.50 per share. Since Option contracts are all standardized sizes of 100 shares your net profit before commissions would be $50. You also would have established a profit of 50%. This is a great return considering that most money managers earn 15% a year!

To determine your Return on Investment you only need to divide your net profit by your initial investment. In this instance you had a 50 cent profit per share on an initial investment of $1 per share.

How are costs reduced even further? Quality suffers. Products are made with cheaper components, in cheap labor markets (outsourcing even further) such as China or Mexico. Companies that supply the components are forced to lower their prices, too. Now, we don't have one company slashing prices, cutting quality and reducing their workforce; we have several.

The worst part of this is that it's a cycle. That's why big business, even though it seems to increase our quality of life (due to increased availability of goods globally), only continues to hurt our economy. As consumers lose money, they require lower prices. To accommodate that, companies have buy cheaper, pay employees less, and yet continue to expand into new markets due to competition and stockholder demand. Now, I'm no Economist, but even I can see, and I believe you can too, that there's eventually going to be a crash, at a global level.

The financial markets only require one thing of you if you are to be successful and that is that you manage your risk on each and every trade. THERE IS NO OTHER SECRET. In my own trading I must admit that it took me years to learn how to TAKE a LOSS. Once I learned how to lose and accept it as part of doing business my trading dramatically improved. Although I consider this to be among the most profound truths that I have learned regarding trading I readily recognize that it is nowhere near as marketable as promoting 18,250% returns. Or was that 12,600%? After all 50 bucks IS 50 bucks!

Sometimes it is difficult to differentiate between FACT and OPINION. In those instances I heed the words of the great Yogi Berra, "You can observe a lot by just looking." Nuff said.

Resource Author Francisco Rodriguez H.
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