Interview with Options Expert Dale Wheatley in Traders World

Oct 06, 2020

   TW: What is your background?

Dale: I was a Telephone Contractor for many years, but needed an investment vehicle that could travel with me, one that was not too complex. I studied all about different investments such as real estate, buying discount mortgages, tax certificates, etc as well as the stock market, but none of those things seemed simple enough for me to control myself without a great investment of time and money. I simply did not have much time to devote to those things since I worked 100 hour weeks and moved around the country doing storm reconstruction for telephone companies, etc. I accidentally happened across options in the mid-1980’s and I immediately saw the advantage of the limited risk-vs-potential returns.

TW: How did you get started in trading options?

Dale: I began trading options in the mid-1980’s. I read every book I could find about options and derivatives, as well as John Murphy’s books on Inter-Market analysis. Later, I discovered Fundamental Analysis and Investor’s Daily and thought there was SOMETHING to their type of approach by ranking stocks by relative strength, etc. However, even with these insightful approaches, something KEY was missing! HOW DO I KNOW WHEN TO BUY OPTIONS? I continued my searching until I discovered TECHNICAL ANALYSIS, using charts and patterns to know WHEN to buy. It took several years of losing many $$ to finally discover an underlying pattern and single indicator, the MACD, that would CONSISTENTLY and ACCURATELY forecast the underlying equity direction change or REVERSAL. I tested the discovery against all of my prior trades, losers and winners, and, to my amazement, I had found the KEY to at least ONE pattern that I could search for and could be relatively sure of success. After many more years and sharing my discovery with other traders, I learned by answering questions others had asked me that I did not have good answers for, initially, but soon found credible answers. Those answers and more questions led to my TIME FRAME ANALYSIS in addition to just an MACD divergence.

TW: Why do you use options?

Dale: I ONLY Buy OTM(out of money) options and usually the near term month, even if expiration day may only be a day or 2 away as my CLEAR pattern reveals itself! Knowing the 2 types of patterns that ALWAYS produce results, I am confident that my % returns will FAR exceed ANY other investment vehicle with limited risk(not obligated to buy or sell anything). As I have shown many people over the years, there is ZERO relationship between your % returns and the RISK. RISK is related to your own knowledge or lack of and discipline, not the vehicle of investment choice. We have just witnessed this in the mortgage markets and money markets. % returns below 10% APR(in one YEAR) and UNLIMITED RISK! Thanks, but NO THANKS! I prefer the 100-10,000% returns in ONE DAY with LIMITED RISK? How about you?

TW: How do you use options?

Dale: Very Carefully! I ONLY LOOK FOR EXACT PATTERNS that always work and I ONLY buy OTM options, calls if I see and UPSIDE pattern, Puts for DOWNSIDE! I am not at risk in the markets. I choose the time, place and options based solely on chart patterns. NO NEWSPAPERS, TV SHOWS, ANALYST, etc! JUST CHARTS! They have proven themselves worthy over many YEARS!

TW: Any disadvantages of using options?

Dale: I don’t know of any disadvantages, but many people come with baggage and refuse to turn off the news or shred the paper and lack BELIEF in chart patterns, so they are frozen into inaction and lose $$. It has NOTHING to do with the charts, but EVERYTHING to do with their own knowledge and BELIEF. Doubt and fear cannot live in the environment of BELIEF, so these traders have INTERNAL issues to work on as well as the CORRECT knowledge, knowledge that produces RESULTS! ……. CONFIDENCE. I don’t give PICKS OF THE DAY, but DO guide them to the correct groups or sectors and explain WHY they have the potential for good trades. As An example, I warned my clients about the market reversal based solely on my REVERSAL PATTERNS a week prior to Oct 28th surge! I explained which options would do well and why, but the choices are up to each trader. I have some DAY TRADERS and other POSITION TRADERS. Even though BOTH use the same patterns, I don’t feel like it is my job to tell them that the DIA Nov 100 Call, for example, is the ONLY good trade! IT IS NOT! I tell them they only need ONE, but one person may choose something totally different than another, but still have the same type of pattern. One may make 100% and the other 1,000%.

TW: Do you have any kind of track record from your service?

Dale: I don’t track PICKS, since I teach PATTERN RECOGNITION. Th ere are PLENTY of others to give you bad picks. My clients are INDEPENDENT TRADERS and DON’T need PICKS, just GUIDANCE so they can find the patterns they require, based on the time they have available to trade and the baggage they bring. I motivate and teach!

TW: Do you have any opinion of the current market and its outlook for the next 6-12 months? How would you trade it using options?

Dale: I only have long term opinions based on LONG TERM CHARTS and my LONG TERM CHARTS(MONTHLY) has shown the Dow to stabilize in this area. The Current UPSIDE DIVERGENCES on the SPY and QQQQ as of Oct 27th, 2008, shows NEAR TERM UPSIDE, but will be derailed if the daily divergence fails, however, as OPTIONS TRADERS, our goal of 500%+ gains in 2 days on the SPY OTM CALLS or QQQQ OTM calls as well as many commodity stocks (Agriculture, Coals, etc) were realized just sine Oct 28th @ 11AM until the 29th in the afternoon, so what happens now does not concern us, honestly!


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