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A 100% return on an options trade sounds impressive—but does it actually prove skill?
In this episode of Thinking In Options, Bill Johnson examines one of the most seductive illusions in trading: mistaking leverage for ability. Options can generate extraordinary percentage returns, but those returns may say more about the structure of the instrument—and the risk being taken—than the skill of the trader.
Using examples ranging from roulette and hydraulic jacks to professional golf, Bill explains why leverage amplifies outcomes, why beginners can sometimes produce results that rival seasoned traders, and why a big win can create dangerous confidence when its true source is misunderstood.
You'll learn why repeatability matters more than spectacular individual returns, how options expose traders to a distribution of possible outcomes, and why understanding the difference between skill and structure is critical before increasing your size or taking more risk.
The next time you see a trader post an enormous gain, ask a different question: Was that strength—or was it the jack?
Thinking In Options with Bill Johnson explores the ideas, assumptions, and misconceptions that shape the way traders think about options.
