Every week, I receive a lot of letters from readers about my books and articles. I answer all the letters, and usually don’t post them. However, in my latest article for Marketwatch, “5 Trading Strategies If You Have Less Than $3,000,” (http://bit.ly/tzoP3J) people left over 150 comments. Many wrote that college students had no business learning about the stock or options market.
Then I received a letter from Daniel Dombroski from the University of Connecticut. As you’ll see below, Daniel has been successfully trading options while going to school. Although it’s not easy, it is possible to make money with a little money. I’m sure that more than a few financial firms will be interested in speaking with him about a job or internship.
Here’s his complete letter to me:
My name is Daniel Dombroski, an undergraduate student at the University of Connecticut. I read your article, “5 trading strategies if you have less than $3,000”, and laughed a little when I read your suggestion on implementing option strategies. I started trading options about three years ago, right out of high school. The markets have been less than friendly over the past few years to many investors and traders but this increased volatility has provided many profitable strategies utilizing options.
My experiences over the past few years have provided me with many unique opportunities, the most important of which is my understanding of the markets. Comprehending and capitalizing on movements has differentiated me from other students who are simply being lectured in the class room. This is a huge competitive edge in the minds of other traders and potential employers. I have also been given the opportunity to educate other students about options trading and how creating a well planned strategy can protect investments in ways simply buying and selling equities cannot accomplish.
I fully support students learning about options and how they can protect and leverage themselves when using a well thought out, discipline trading strategy. What is important to point out is that results will reflect how the trader views options . If you treat this vehicle like gambling then your account will reproduce similar results. You may win in the short run but the house always gets its money.
As a disclaimer, my primary trades are credit and debit spreads to generate steady income. Correct sizing allows me to adjust my positions accordingly. I plan on continuing to grow and adapt my strategy and rules over time to reproduce results I am comfortable with.
In short, thank you for recognizing this investment vehicle for people with small accounts (particularly college students.) I look forward to reading more articles that encourages eager young prospective traders my age to take active steps in creating their own financial independence and securing a profitable future.