Our Probability Based Approach May Challenge Everything YOU Know About Option Trading. Learn to Use the Inevitable Passage of Time as a Means to Reduce Risk and Produce Consistent Gains Over the Long Run.The portfolio is managed by monitoring and trading option greeks whit a focus on the SPX beta-weighted portfolio Delta (directional bias) and positive Theta (time decay).
The SECRETS to successful option trading are consistency, discipline, and understanding the primal forces that make options a viable investment strategy for nearly any portfolio. Instead of purchasing options and hoping that by expiration your contracts expire in the money (profitable), we focus on the other side of the trade which sees profitability over 70% of the time. The primary profit engine that is used in every trade idea provided in this newsletter is Theta Decay (also known as time decay). Over 70% of all options expire worthless and we seek to take advantage of that consistency through the exclusive use of spread trading.
More and more traders and investors are recognizing the power of options because it is one of the fastest and most consistent ways to make money in financial markets. It is no secret that most investors and traders do not dare trade options because of the perceived risk that goes along with them. However, options allow the educated investor to leverage their money, protect their portfolio, or speculate on specific stocks, indices, commodities, and volatility. It is no wonder why option volumes have jumped almost 500% in the past ten years.
However, successful trading of these vehicles requires a skill set that is not intuitively obvious. As opposed to the world of the equity trader where price is the only variable, the value of options respond to the mutual interaction of the primal forces that drive option pricing. The primal forces in no particular order are time to expiration, implied volatility, and price of the underlying. The interplay of these forces defines the yin and yang of option trading.
Key to Options Success #1
Utilizing Multiple Spread Trades such as Butterfly Spreads
Using multiple trade constructions allows the trader the flexibility to produce returns in a variety of trading environments. Options trades can be taken with a directional bias or a focus on time decay as the primary profit engine. Members will become proficient using trade structures such as Vertical Spreads, Calendar Spreads, Long Butterfly Spreads, Iron Butterfly Spreads, Iron Condor Spreads, Credit Spreads and a variety of ratio spreads. A combination of long butterfly spreads, various credit spreads, and a variety of debit spreads are used in combination to produce a constant positive theta portfolio position. Essentially the portfolio is designed to collect daily time decay with a focus on underlying equities or indexes that have implied volatility levels that are above historical averages.
Different spreads are used based on the desired outcome and volatility considerations. Through the use of multiple spread types and different expiration dates members are capable of producing dynamic hedges against unexpected price movements. The adjustability and broad range of trade structures allow members to profit whether we are confronting a low-volatility market, sideways or consolidating conditions, or a high-volatility marketplace.
Key to Options Success #2
Utilizing Time Decay as a Hedge or Profit Engine
Using an inevitability such as the passage of time as a primary profit engine dramatically reduces overall capital risk. In addition, the proper utilization of time decay based trades can dramatically reduce risk while maximizing trade efficiency. Unlocking the passage of time to produce profits radically improves the probability of success over the longer term. If you are not capitalizing on time decay in your option trading, you are leaving money on the table!
I find your daily commentaries extremely helpful in the decision making process, and I am gradually getting accustomed to your timing. It is also a sort of mentoring process , which I think is certainly a good idea in my case.I have some experience of dealing with other consultants and I much prefer your approach of explaining the raison d`etre behind the market moves and the reasoning for your trade ideas.
I am looking forward to covering the full scope of option strategies, as they present themselves in the market and I am looking forward to a fruitful and profitable relationship, and many more successful trades to come.
- Ian McNei -
The financial markets can stay irrational longer than
you can stay solvent.
It is always a good idea to refrain from over committing your capital into only a few positions. You will always want cash (dry powder) in order to participate in the next high probability investment setup. Remember that NO TRADE is a position in and of itself. OptionsTradingSignals will help keep you disciplined, as we preach consistency and discipline from our market analysis and trade ideas presented within the newsletter.
We regularly remind members to use limit orders when entering and exiting positions and we use a hypothetical $100,000 portfolio so members can view position sizing limits, overall portfolio Delta levels, and Beta-weighted analysis to allow members to use appropriate position sizing based on their own risk capital pool.
You can lose money on options even if you are correct about the direction of the underlying investment if you don’t understand how the options pricing model works.
Have you purchased options naked (long a call/long a put), and watched the stock, ETF or index move in the direction you wanted, only to see the value of your options deteriorate, causing you to lose money? Sure, most novice option traders have . . .
Not understanding how the different forces in the marketplace affect your option trade means you are simply buying a lottery ticket and will most likely lose substantial sums of trading capital over the long run. OptionsTradingSignals removes this risk from your trading by providing members with detailed educational material and timely market analysis.
Subscribers receive only the best and most logical option trade construction ideas which fit current market conditions giving them the least amount of risk and the highest probability of generating profits. Unlike many of our competitors, we do not subscribe to a one size fits all methodology. We use different trade structures based on time to expiration, volatility levels, and technical analysis. As a member you can be trading the same strategies as the pro’s and you will learn how, when, and why each options strategy is to be used through our educational style newsletter.
Thank you for all your hard work on the SLV trade idea this past week. I had a blast following the adjustments and learned a bunch. Having started off at a loss just made it all the sweeter when we recovered and then closed out with a huge profit. I made about 38% profit on the 34 and 35 put calendar spreads. I feel I thoroughly understand the calendar concept now.
My understanding is that the calendar spread works best (harvesting the most juice) if put on at the money. I was amazed at how much time premium the puts had with only a few days left before expiration. I made 98% when I closed the put calendar using your analysis. I was trading with 25×25 contracts on each calendar spread so we made some serious money here. Thank you again for all your work.
Good trading. . . .
- Bill R. -