Fun, exciting classes-material great but extremely risky.
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Dan Sheridan is very entertaining, especially in the world of trading mentoring. He reminds me of Charlie Sheen from Two and a Half Men, (he even looks a bit like Charlie Sheen), sometimes leading his nephew Jake (read mentoring students), down the road of temptation inadvertently while maintaining a rough and direct edge that is characteristic of experienced former pit traders. As an experienced trader/investor (not to mention that I’ve taken quite a few courses on trading during my career), I was willing to try out Dan’s ideas – which I did during the course – while keeping these trade ideas very small – maintaining a healthy mix of experimentation and skepticism.
I enjoyed every one of Dan’s classes much like every trader likes to hang with experienced and successful traders, hearing their carefully chosen words of wisdom. The course itself is is well thought out and it is hands on. Students get to try out Dan’s new options analytic software called OptionNet Explorer during the six weeks of the course at no additional cost. This software has the look and feel of OptionVue – indeed, Dan was a veteran user of OptionVue for many years – which is a powerful options analytic program. You can create and back-test all the options strategies under the sun, with first rate visual graphics.
If all these options concepts sound Greek to you, then I don’t think you’re ready for any of Dan’s courses. He is much more suited to intermediate and advanced options traders. (For beginner options courses I would recommend the folks over at OptionVue who run a rigorous curriculum called DiscoverOptions designed for beginners to advanced options trading mentoring). (There are a number of options courses out there, and perhaps someday I’ll get around to reviewing them).
I have not taken any of Dan’s advanced mentoring programs (which are one-on-one personal coaching courses where he supposedly helps you get your whole trading game plan together and then makes sure you follow it), so I can’t comment on just how successful students are that graduate from it. But I have heard good things about both Dan’s advanced programs as well as DiscoverOptions personal coaching and mentoring programs. One of the key differences between the folks at DiscoverOptions vs. Sheridan Mentoring is that the former is comprised of a group of successful traders, whereas with the latter, it’s essentially Dan. For those who want a bit more diversity (being able to contrast, compare and multiple trading styles), it’s better to go with DiscoverOptions. Also, keep in mind that these are the guys (Len Yates and Steve Lentz) who designed and developed OptionVue – one of the premier, if not the best options analytical software programs around.
My best guess as to why Sheridan has chosen the tutorial path instead of continue to trade for Najarian may be that Sheridan and Najarian have always hedged their bets with commission or slippage via the brokerage community in some way. This is what truly gave them an edge – along with the occasional explosive spec trade (e.g. time bomb butterflies or otm calls/puts during earnings season – strategies that have very little if anything to do with option income trading and more with direction). Both Sheridan and Najarian trade for their own personal accounts – so they put their money where their mouth is – however, both are affiliated with brokerage firms either directly or indirectly (TradeMonster, ThinkOrSwim or TOS as the latter brokerage firm is referred to as). In fact, Sheridan’s brother at one point was one of the directors at TOS – I don’t know whether he still is after TD Bank bought out Tom Sosnoff’s options brokerage firm.
The point is that the benefits of running a diverse portfolio of options income spread trades appear to me to be more in line with brokerage firm’s bottom lines than with those of individual investors. That’s because options spread trades are multi-legged and span a wide range of strikes and expiration months – which brokers absolutely love because it means a higher number of trades, meatier bid-ask spreads at the wings, and greater liquidity for all. While it is certainly possible to make money with Dan’s option income trading approach – only a select few of his students will be successful over the long haul. My best guess is that around 5-10% of his students actually average 4-6% per month after at least one year of breaking even, 50% of his students break-even after a year of trading and then give up, and the remaining 45% or so lose money consistently and then give up. (While this data is not readily available, it is based on the feedback that I get from other students taking the course, their skill level and experience trading, as well as my own experience trading and back-testing the viability of these strategies).
Don’t let the lure of 4-6% monthly returns fool you. In reality, they are likely to be even lower not only due to the cost of slippage and commissions but also because of the fact that you can only commit 50-75% of your equity to options trades (due to the cash levels that you must have on hand in order to adjust positions as well as to the much higher risk of ruin due to the leverage effect of options). That’s perhaps the subject of another article sometime. For now, the message here is the same message that I give in my previous article on options income trading – caveat emptor – let the buyer beware.
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This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
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