Interview with Options Expert Dale Wheatley in Traders World
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Traders World: What is your background before you started trading options? Dale: I was a Telephone Contractor for many years and needed and wanted an investment vehicle that could travel with me, one that was not too complex. I studied all about different investments such as real estate, buying discount mortgages, tax certificates, etc. as well as the stock market, but none of those things seemed simple enough for me to control myself without a great investment of time and money. I simply did not have much time to devote to those things since I worked 100-hour weeks and moved around the country doing storm reconstruction for telephone companies, etc. I accidentally happened across options in the mid-1980s and I immediately saw the advantage of the limited risk-vs-potential returns. |
TRADERS WORLD: How did you get started in trading options?
Dale: I began trading options in the mid-1980’s. I read every book I could find about options and derivatives, as well as John Murphy’s books on Inter-Market analysis.
I also discovered Fundamental Analysis and Investor’s Daily and thought there was something to their type of approach by ranking stocks by relative strength, etc. However, even with these insightful approaches, something “KEY “was missing!
The burning question was and still is HOW DO I KNOW WHEN TO BUY OPTIONS?
I continued searching until I discovered TECHNICAL ANALYSIS, using charts and patterns to know WHEN to buy.
It took several years of losing many $$ to finally uncover an underlying pattern and single indicator, that CONSISTENTLY and ACCURATELY forecast the underlying equity direction change or REVERSAL and that’s the MACD used in a very disciplined and specific approach.
I tested the discovery against all my prior trades, losers, and winners, and, to my amazement, I had found the KEY to at least ONE pattern that I could search for and would have a high probability of success.
After many more years and sharing my discovery with other traders, I learned by answering questions others had asked me that I did not have good answers for, initially, but soon found credible answers. Those answers and more questions led to my TIME FRAME ANALYSIS in addition to just an MACD divergence.
TRADERS WORLD: Why do you use options?
Dale: Leverage. I ONLY Buy OTM (out of money) options and usually the near-term month, even if expiration day may only be a day or 2 away as my CLEAR pattern reveals itself! Knowing the 2 types of patterns that ALWAYS produce results, I am confident that my % returns will FAR exceed ANY other investment vehicle with limited risk (not obligated to buy or sell anything).
I have shown many traders over the years, there is a ZERO relationship between your % returns and the RISK. RISK is related to your own knowledge or lack of and discipline, not the vehicle of investment choice. We have witnessed this in the mortgage markets and money markets. % Returns below 10% APR (in one YEAR) and UNLIMITED RISK!
NO THANKS! I prefer the 100-10,000% returns in ONE DAY with LIMITED RISK?
TRADERS WORLD: How do you use options?
Dale: I’m Patient and only look for the exact patterns that always work and I ONLY buy OTM options, calls if I see an UPSIDE pattern, Puts for DOWNSIDE! I am not at risk in the markets. I choose the time, place and options based solely on chart patterns.
NO NEWSPAPERS, TV SHOWS, or ANALYSTS I simply rely on the CHARTS! They have proven themselves worthy over many YEARS!
TRADERS WORLD: Any disadvantages of using options?
Dale: I don’t know of any disadvantages, but many people come with baggage and refuse to turn off the news or shred the paper and lack BELIEF in chart patterns, so they are frozen into inaction and lose $$.
It has NOTHING to do with the charts, but EVERYTHING to do with their own knowledge and BELIEF. Doubt and fear cannot live in the environment of BELIEF, so these traders have INTERNAL issues to work on as well as the CORRECT knowledge, the knowledge that produces RESULTS! ……. CONFIDENCE.