Many people think they can quit their day job and start day trading. The truth is, most do not succeed day trading long term. There is an alternative that can generate monthly income just like you hoped to do by day trading. In this post we explore the concept of selling premium in the options market using probability-based options trading.
The short butterfly option trading strategy is a good way to earn small profits, while keeping downside risk to a bare minimum. If you think a stock is set to experience a sizeable move, either up or down, break out your short butterfly playbook.
Investing comes with risks, that’s a fact of life. Generally speaking, the greater the risks, the greater the potential for profits. In these regards, options trading offers a high potential for profits, but does come with some higher risks. This is especially true for newer investors. Experienced and/or well-educated options traders, however, can utilize a variety of strategies to lower risks.
Knowing how the Greeks influence premium is not academic. Understanding how they are likely to affect your next trade is a critical component of that trade’s set up. You should always perform an analysis of the Greeks before you send an order to your broker. Here are some important things to look for.
If your a follower of this blog or a follower of my trades you might have noticed I stopped posting trades. That is all about to change starting with this post. I am once again committed to posting the trades I place monthly. The reason for the absence in trade posting is we have been crazy busy preparing for the launch of our new trading platform -- Just not enough hours in the day :(.
If you want a conservative option investment that controls losses, take a look at the butterfly strategy. This derivative tactic comes with finite profitability, but also downside protection. The butterfly play is best for stocks that have low volatility.
Most traders realize that options increase or decrease in value as the underlying stock moves up or down in price. But, there’s a lot more to how an option’s price changes over the course of time before expiration. A better understanding of option greeks will go a long way to improving the success of your trades.
Making money trading delta options is how top options traders trade. What many traders don’t consider is that your delta doesn’t have to stay consistent throughout a trade. Many professional options traders manage their positions in order to add or decrease delta.
Volatility Trading is a variable in an option pricing model used to determine the theoretical value of an option. And, among all the variables in an option pricing model, it is the only one that is derived from market sentiment. But, the market doesn’t always get it right. That creates opportunity for an options trader.
Over the years I have learned that there is no upside to emotional trading. The market is random, and if you try to guess what the next tick will be you will lose. In this post I walk you through designing a trading strategy that prevents your emotions from sabotaging your trading through the wildest of times.
