Motley Fool Options is more than just a series of options investment recommendations. It’s an entire community of Foolish options investors, who are passionate about what they do and willing to “pay it forward” by lending a helping hand to new members.
Are you an investor who wants to try out options trading? If you are, you need to know that an options picking service (if used correctly) can boost your success greatly.
In this article, we shall review the Motley Fool Options tool, an options picking service that has won numerous praises over time. If you are wondering what this program is about, take your time and read this detailed write-up that we have put together for you.
We shall attempt to answer questions such as Is it legit? How can you benefit from it? How much does it cost? Here we go!
- Motley Fool Options Overview
- Key Components of Motley Fool Options
- The Trade Thesis
- Motley Fool Options Performance
- The Pricing
- Is It Legit?
- Who is it for?
- Is the Service Worth the Money?
Motley Fool Options Overview
Before we get to the specific service, let’s first briefly discuss the parent organization, Motley Fool. This is one of the leading brands of financial services globally and was founded by Tom and David Gardner back in 1993.
The company focuses on premium stock advisory services and stock market news. Some of the services that we could associate with the brand include the Rule Breaker and Stock Advisor. The stock picks that the services offered have a track record of beating the market for the past two decades.
So, we could say that any service by Motley Fool puts you on the path to success.
Heading over to Motley Fool Options, this is a service that was specially designed with options traders in mind. The program was launched in 2009 and banked on Motley Fool’s popularity to appeal to options investors.
This service is quite resourceful, but the standout features are the options education and options alerts. We shall look at these two in detail alongside other components in the next section.
Key Components of Motley Fool Options
Let us now see what features you will access once you subscribe to the service.
I) OptionsU Education
One thing we can tell is that options trading is not a walk in the park. This fact emphasizes the need for continuous education. Further, even if you are an established investor in the field, the market dynamics are always changing, and you need to acquire adequate education to keep up.
There are tons of options education content in the program, and you can find materials for beginners and advanced traders.
This educational program is divided into three main sections, and they are:
- Strategies and
Let’s look at the lessons briefly:
This topic covers the basics of options trading, and it covers subjects such as Calls and Puts, Writing, Buying, and Exercising Options.
Here, you will find options trading strategies for beginner and intermediate levels. In this topic, you will learn about Trading options alongside stocks, buying puts for protection, writing puts, writing covered calls, timing, and allocation.
As the name suggests, this is a topic that covers advanced options trading strategies. Some of the lessons you find here include Diagonal calls, Bearish and Bull call spreads, Protective collars, Strangles, and the Black-Scholes pricing model.
As you can see, there is a lot of educational content that would be of use to all investors regardless of their skill level.
II) Options Alerts
The options alerts are the other crucial component of the Motley Fool Options service. We understand that most traders do not like or have the time to monitor the market for the entire day.
Therefore, swing traders and investors will appreciate that the service sends out several new options recommendations every month. Keep in mind that even though the picks given out by this service need more management as compared to stocks, you should have an easy time doing so.
Besides getting new options alerts, you will also get access to a list with previous ones, and you may find some that are still active.
Types of Options Alerts
A closer look at this program confirms that this is not a basic options alerts service that recommends several long-term calls and puts on large-cap stocks. Instead, it is more comprehensive and uses a wide range of options strategies.
To start with, the service recommends both buying and writing options. It may suggest buying calls, writing puts, or a combination of both.
The program is then not restricted to call/put strategies and focuses on finding a strategy that maximizes the profit potential while minimizing the risks. The common types of alerts that you get include:
- Basic calls/puts
- Synthetic covered calls
- Bull call spreads
- Covered calls, among others
Not everyone may find the above strategies to be a walk in the park, and that is why we advise that you only follow what you are comfortable with. You can always find the alerts that suit your skill level, while you could always refer to the education section in case you need a deeper explanation on anything.
The Alerts’ Format
The Motley Fool Options alerts come as reports divided into the quick-view section and the essential section.
In the quick-view section features:
- Action – which is the alert itself
- Allocation – where members are advised on the portion of their portfolio that they ought to allocate towards the trade
- Price guidance – advises members on the amount they can pay or sell an option for
In case you want more details, you should move to the essential section that is divided into the following parts:
The Trade Thesis
This part is also known as the rationale section and explains why that recommendation was made. The information that you find here is specific to the company and the industry that you are investing in.
The Options Strategy and Alternatives
The next section explains why a particular strategy was used. For instance, you will be told why it was recommended that you sell puts rather than buy calls.
Then, you will also find alternative options strategies that you can follow if the one recommended does not work for you. for example, the team may offer a covered call strategy to be an alternative to writing puts.
In general, if you are an investor who wants to understand how to settle for an effective options picking strategy, you will greatly appreciate the educational resources contained in this section.
How to Follow an Alert
This final section tells you how you can follow an alert. It irons out the strategy and recommends the amount of capital you can allocate to a particular trade.
Motley Fool Options Performance
Now that you know what you get when you subscribe to this service, the question that must be ringing in your head is, does it deliver? To get to an answer, we have to look at how the program’s options recommendations have performed over the years.
Once you subscribe to the service, you will gain access to all the option picks that the company has made since it was launched. From our general analysis, we noted that 84.6% of the option picks had returned positive yields.
We took a look at the previous 20 trade alerts, and we noticed that the best performer yielded 255% while the poorest one gave back -100%. These are just the extreme results while the majority of the picks, most of which are still active, had average returns ranging between 20-30%.
Note that it is not odd for the service to issue alerts and then revise them. That’s a potential downside worth keeping in mind.
The Motley Fool Options program costs $999 per year. However, there is an occasional promotional offer whereby the price goes down to $899 per year. So, always be on the lookout to take advantage of this discounted price.
There are no monthly subscriptions with this service, probably due to its active trading style. Whereas there are ‘set and forget’ picks, there are those that need more maintenance. So, when you get uninterrupted access all-year-around, you will be better placed to maximize the upside.
The other bit we have to discuss is the 30-day satisfaction guarantee that the program comes with. If within 30-days you are not satisfied with the service, you are entitled to full credit of your subscription fee rather than a straight-up refund.
This credit will be applied to any other Motley Fool service that you may be interested in.
Is It Legit?
Yes, it is. The main reason is that the Motley Fool is a financial services company that has been around for close to three decades. During this time, it has made a name for itself of giving out mainly profitable trade recommendations that always seem to beat the market.
The track record of the picks is there for you to make an independent analysis so that you can see its success and legitimacy.
Who is it for?
There are certain groups of investors who may benefit a lot from this service. Keep in mind that options tend to be riskier than stocks, which is why not every investor would be pleased with this program.
Let us now see who this service is most suited for.
1. Options Traders
As you must have known by now, options traders are the greatest beneficiaries of this service. The program will issue winning options regularly.
2. If you are starting out options trading
As a newbie, you should know that options tend to be more complex than stocks. That is why you should strive to give your all towards learning everything there is about the trade. Luckily for you, there are tons of educational content that you can take advantage of.
The experienced team running the program will be of great help to any trader trying to break into the often-confusing world of options. However, we urge you not to fully rely on the information that you find in the program and conduct your own independent research. This way, you can easily know whether options trading is really for you.
3. Do you love volatility?
In general, options are more volatile than stocks, which implies that they are not the perfect fit for everyone. Some investors prefer the stability that comes with stocks, unlike the potential risks in options investments.
Options often experience 50-100% swings, and therefore you should be prepared to deal with the volatility the investments come with.
Is the Service Worth the Money?
We believe that this service is worth the money depending on the type of investor that you are. The subscription fee may seem steep, but you can relax with the knowledge that there are picks with returns that exceed 100%.
If you settle for these picks, you could recoup the entire fee with just a few trades.
However, there are some pointers that you need to keep in mind:
- Take your time to read about options, especially if you are a newbie. This will help you demystify the trade so that you can understand what it is all about.
- You need to take a more active approach to trade than you would have done with stocks
- Consider your portfolio size relative to your subscription fee. The general rule is that you will get more value out of the service if you allocate more capital to the trade. For instance, breaking even with $5,000 in your portfolio is easier than if you only had $2,000.
With that detailed review of the Motley Fool Options program, we hope you now understand what the service is all about. We believe that it is an amazing program that would greatly benefit all options investors regardless of their skill level.
We were most impressed with the quality of the reports and the track record, and these two features make it stand out from other competing services?
So, if you are an options trader, we suggest that you try out this program, and we believe you will reap great benefits from it.
Blake is a self-made online day trader with a knack for adventure. On his free time, he loves reading and learning new methods in the trading as well as improving his jiu-jitsu skills. He currently resides in New York City.