By Jeff Clark, editor, Market Minute

Today, I’ve got something special for you…

I recently sat down with colleague Luis Hernandez – Editor in Chief over at InvestorPlace – for an interview…

I gave Luis a rundown of my options philosophy… why I never, ever trade stocks…

And how I really use one specific pattern… a “magic pattern,” over and over again for consistent gains like 152%… 222%… and even 329% in just days.

(You can learn to use this pattern yourself right here. I predict it will be the single best trading strategy going into 2025 and beyond.)

Check out our interview below, or scroll down to read the transcript.

Transcript

Luis Hernandez: Hey everyone, I'm Luis Hernandez, editor in chief at InvestorPlace. Today, I'm here with master trader, Jeff Clark.

He's a 40-year industry veteran with an excellent track record of making prescient calls in the market.

Just in the past month, he made 50% in 28 days on Toll Brothers puts, 70% on Halliburton calls in less than a week, and 20% on SPY puts in less than two hours for his subscribers.

And in 2023, a year most people lost money, Jeff had a 75% win-rate in his entry-level trading service, Jeff Clark Trader. That's a pretty big deal.

Going back a little further, he's well known for pounding the table about operating with extreme caution in 2007 for calling the crash in 2008, then having one of his best trading years ever.

He was making money hand over fist when traditional investors were losing their shirts. Now, Jeff is a pretty humble guy, but he truly lives and breathes the options market.

He's up at 5 a.m. every day scanning the markets for opportunities for his subscribers, sorting through hundreds of charts, and he's developed a way to make gains from one simple chart pattern.

A magic pattern that helps him make gains over and over.

I know there's more to it, Jeff, but can you tell us a little bit about your background and a little bit more about this magic pattern?

Jeff Clark: Yes, sure. First of all, thank you, Luis, for having me here. Essentially, I've been trading the markets for 41 years.

I'm an option trader, and I think it's important to point out that there's a big difference in the way you approach the market as a trader versus an investor.

You know, folks think they're investors, which means that you're looking at the long term, you want to buy a stock today, hold it for years, and in the long term, stock prices are based on fundamentals, right?

So it's the earnings, it's the book value, it's the dividend policies, the nature of the business. That's what produces profits over the long term as an investor.

In the short term, as a trader, I like the idea of buying in the morning, selling in the afternoon.

If I can do that, most of my trades take maybe two weeks, a month would be a long-term position for me.

And in the short term, as a trader, what moves stock prices, is not fundamentals, it's emotions, right?

Intel didn't go up a dollar a share today because the business at Intel changed to make it worth a dollar more a share.

Intel went up a dollar a share today because the greed around Intel pushed it up a dollar a share.

And so as a trader, what I look to do is figure out where the emotion is on a stock and then profit off of betting that emotion has gotten either a little bit too extreme on the upside or too extreme on the downside and betting for a reversal.

So, a lot of folks who call it a “reversion-to-the-mean” type of strategy.

So when we talk about a magic pattern, that's kind of the crux of the magic pattern is you're looking for a stock that's gotten a little bit too overheated, look for it to come back down to its average price level, or you look for a stock that's gotten panic swiped out and look for it to come on back to its normal level.

Luis: Now, one of the big objections that you hear from people about options trading is they just think it's too risky.

I mean, you know, investors know a lot of people who, you know, they got into the options market and essentially lost their shirts.

Jeff: Yeah, you lose your shirt in the options market when you do stupid things, and I've done that myself.

I started trading options 41 years ago, and I had a really good run at the beginning of it. I think I went 17 for 17. I didn't have a losing trade.

And, I was a young kid at the time, and of course, a young kid at the time going 17 for 17, the ego kind of gets in the way.

I thought, “well, why am I playing around with small trades? I'll just make one big bet.” And of course, it was that one big bet that I blew everything up.

And I learned from that because options were originally designed as a way to reduce risk. You can take a stock position.

Show me any stock you want, you want to take a position in it, and I'll show you a way using options where you can reduce the risk in that position and increase the potential reward in that position.

When used right, options are a tool to reduce risk and increase the potential profit.

Where people make the mistake and where it becomes risky and people panic about it is, let's say, for example, you wanted to buy 1000 shares of Intel.

It's 25 bucks a share.

You'd put $25,000 in and you'd be willing to risk, say 10%.

So if the stock falls 10% you cut your losses and you move on, go somewhere else.

So you'd be risking $2500.

What I would do is I would take a portion of that $2500 you're willing to risk, take the other $2250, stick it in the bank.

That's going to be lock solid safe.

I take a portion of that $2500 and I'd find some way to use an option strategy that is designed to profit dollar for dollar with the stock or lose dollar for dollar with the stock.

But in no situation would I ever risk more than that $2500.

Most of the time, I can get away with maybe half of that.

So, still have the same upside limit. My downside a little bit, people make the mistake is instead of buying 1000 shares of Intel and putting $25,000 into the stock, they take the entire $25,000 and they put it in the option. That's what blows up an account… That's where you become risky.

So, rather than doing that, look to use options as a way to reduce the risk, you don't stay in the option game for 41 years if you're taking on that kind of risk, you're blowing up the account.

And most people I think would do much better trading options if they understand the right way to do it.

Luis: Well, being in this business for 40 years and having the track record you do clearly indicates that you have the right way to do it.

Jeff: Well, yeah, but it, it didn't happen overnight. I mean, I had to learn, I had to make my own mistakes and figure it all out.

So, one of the things, that I like to do now in teaching people, is to tell them of my mistakes, show them where I made those errors and hopefully that stops them from making the same errors.

Luis: That's terrific. Thanks so much, Jeff.

To sum up, Jeff with his decades of trading experience, has really dedicated his life to helping everyday investors make money using options the right way. He's not gambling, making risky bets, and most certainly isn't stampeding into the viral trend of the moment.

Jeff at his core is a father, a mentor, and very, very logical.

He doesn't let emotions rule his trading and that's what following him will get you – a calm, collected guide to options trading, and there's a really good bet you'll make money along the way.

Thanks again, Jeff, for joining me today and thanks again, everybody. We'll talk again soon.