Options Money Machine - Not an ATM
Although this review is about Options Money Machine, the real focus is the underlying lesson (to be revealed later) for new and developing traders.
The name, Options Money Machine, is quite enticing. To take it once step further, the company's catchphrase is "Create Your Own Personal ATM With The Ultimate Income Strategy." Catchy for sure. What trader doesn't want a system or strategy that prints money like an ATM?!
Founded by Adam Mesh and Eric Levitt, the Options Money Machine website states it is "The simplest, most effective, options based income strategy the world has ever seen. No matter what level of trader you might be, we can teach you our method in under an hour and have you stuffing cash into your pocket the very next day." That's a helluva statement given the vastness of the world. And, literally, stuffing cash into your pockets? Even very deep ones?
Hopefully, even the most naive newb would read this and know it's too good to be true. Well, this newb gave it a try back in October, 2015.
Options Money Machine isn't a system or a strategy, it's a trading service that utilizes a strategy - weekly credit spreads, to be exact. And, the reason it's so simple and can be taught in under an hour is there isn't anything for the subscriber to do except take the trades the service recommends. It's puppet trading at its finest. The only thing the subscriber needs to know is how to enter the orders with their broker, which I suppose could be taught in under an hour.
Here's how it works: every week, Adam and Eric host a virtual meeting to which members can attend via the internet or phone. They announce the 2-4 underlying equities they've selected, along with the short and long strike prices for the options expiring the following week. All the subscriber has to do is place the trade, collect the credit and wait for the spread to go to options heaven. Now, that is pretty simple - assuming their analysis is correct.
At the time of this writing, the Options Money Machine website boasted the following trade results: 209 total trades placed, 169 total winners with 137 of those being 100% winners and total profits of $9,319.00. That's an 81% win rate with 82% of those resulting in the credit spread expiring worthless, in which case the trader keeps the entire net credit. Those are impressive results (take note they don't acknowledge the total number of 100% losers). However, such a win rate was not my experience during the short time I subscribed to the service. In fact, it was quite the opposite.
The only reason I joined Options Money Machine was because they offered a risk free 30-day money back guarantee. I figured I had nothing to lose, so why not test drive the service? Well, I did have something to lose - money! The amount of money I could have lost had I taken every trade Adam and Eric recommended would have been far greater than the refundable subscription fee.
I don't want to give the impression there weren't winners. There were. To be fair, maybe slightly more winners than losers. However, anyone who trades credit spreads knows the risk vs. reward (RvR) is much different than trading shares.
Instead of a 1:2 RvR many traders look for when trading shares, credit spreads are the reverse with a typical RvR of 3:1, 4:1 or greater. Meaning, a trader collecting a $200 net credit might have a total risk exposure of $800. Taking a few maximum losses on credit spreads can turn a trader's equity curve upside down or, worse, blow up their account.
What I experienced with Options Money Machine in the 23 days I was a member was a series of trades where the dollar amount of the losses far exceeded the profits during the same time period. Fortunately, I chose to sit on my hands and observe during the trial period rather than actively participate. I wanted to see how well Adam and Eric performed before I put real money on the line. And, I'm glad I did. The couple times I did take their trade recommendations they were either closed for break even, a small profit or a loss that exceeded my initial risk.
One trade in particular solidified my decision to cancel my membership and request a full refund. I don't recall the details except it was a bull put spread that went against us. When this happens, the Options Money Machine website states that they help subscribers "manage the trade through a series of alerts if needed." The alerts are supposed to be provided via text and email.
Well, at the time this trade went code red, Adam and Eric were nowhere to be found. I believe Adam was traveling internationally and I don't recall why Eric was unavailable. However, they knew in advance they would be indisposed and assured the subscribers that guidance with this particular credit spread would be provided since it was obvious from the start the trade was going to be a challenge.
In the end, alerts and assistance were not provided until it was too late. On the Friday this credit spread was expiring, price breached the short strike mid-afternoon and soon went through the long strike. I recall Adam finally emailing and texting the members with about an hour left in the trading day, assuring us defensive action would be taken if price retraced back above the long strike. Of course, this never happened and, ultimately, the spread expired in the money (ITM), resulting in a maximum loss.
The experienced members, who knew how to manage the trade, probably unraveled the position and exited the trade, or otherwise adjusted it, thus minimizing their loss. However, the inexperienced traders who required hand-holding had no choice but to watch the trade go against them, hope for a late day snapback and pray for price to close anywhere but below the long strike.
Over the weekend the subscribers received an email informing us that a meeting would be held that coming Monday to address what had happened. To their credit, Adam and Eric owned the mistake and were very apologetic. However, it seemed that every meeting in which I participated had a common theme - Adam and Eric apologizing for poor performance and vowing to do better for the subscribers. I don't know for sure, but I suspect they were unable to bring this promise to fruition. At the time I joined Options Money Machine Adam Mesh was making a big push to market his service, but it's been quite some time since I've seen or heard his name in the trading circles.
The Bottom Line: I don't need to advise anyone to avoid Options Money Machine. They can easily come to that conclusion themselves by doing a simple Google search and reading all the complaints and negative reviews about Adam Mesh and Options Money Machine. The key takeaway, which I alluded to at the beginning of the post, is don't be a puppet trader. Put in the time, do the reps, invest in your education and become a self-sufficient trader. Develop a plan that meets your individual personality and risk tolerance, continually adjust and improve the plan, and trade your plan. Bridge the Gap. Evolve. Adapt.
