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The Benefits Of Learning Options Trading

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For most people considering a new, profitable investment options might prove to be very challenging, especially if they do not know where to start. Usually, it is advisable to start with the basics, such as learning how the investment you are considering works before putting your money into it. Although this may seem easy, the question of which kind of training should be considered.

If you are looking at option trading as your investment vehicle, it would be prudent to first invest your time to learn how the options market works. Learning options trading may appear complex to many people, especially when you consider the jargon, trading principles, techniques, and the strategies used. On the contrary, this should encourage you to learn as much as possible and to learn everything you need to in order to get into the trading business.

Options trading is highly rewarding, especially if you are knowledgeable about it. However, investing in options without knowledge is also very risky. As an investor, you would want to keep the risks as minimal as possible and to maximize the profits. Well, if this is the case, then investing in good training should not be debatable. Even though your broker may be doing most of the work for you, you should try as much as you can to get a good foundation by learning all the necessary fundamentals of options trading.

Here are some of the benefits of learning about options trading that you need to know:

1. Trading options is very risky and can be complex at times, but with good training you will be able to minimize the risks and maximize the profits.

2. Learning about options trading will help you use the right strategies at any given time. This is because there are many option trading strategies that can be used either independently or in combination. Different market conditions require different strategies and your education will help you know when to use them.

3. Learning about options trading will enable you to avoid making unnecessary mistakes that would prove to be very costly on your end.

4. Ultimately, learning about options makes you a better trader, which increases your chances of increasing your profits.

As you consider putting your time, effort, and money into learning about option trading, it is important to find a good training program that will help you learn a lot. What should your training program contain? This is a good question to ask before enrolling in any particular training program.

The content of your training program will largely depend on your specific needs. If you are a beginner, the course content should be geared towards equipping you with the relevant basic skills to start trading. Your level of knowledge should determine the kind of program you require. To some, learning may require them to attend certain seminars or conventions, while for others it may require going through a more formal options training setup.

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Options Trading: Earn a Living Trading Options – Video 8

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I had to wait about 15 minutes or so and then I simply locked in my profits as I showed you on the Qs last week.  What I did was I combined both my Q position and my IWM position into the profit graph here on this analyze tab.  It shows you that I have both the IWM and the Q positions on the three-legged box and basically this is where we are right now.

The live price is $75.47 which is right in here.  Remember that the green line is our expiration and the white line is our current price.  What I’ve done is I’ve locked in a profit.  I have an open profit of $554 on this position.  But what exactly has this combined position of the Qs and the IWM ETF done for me?   Well what it’s done, really,is given me not only a guaranteed profit of $478 at expiration,even if it doesn’t move,but it also has given me unlimited upside potential and unlimited downside potential.  As you can see.I can’t lose money on this position.  It’s impossible.  It just can’t happen.  I’ve locked in my profits so if the market just stays the same well I’ve got $554 open profit.  I’m guaranteed a profit of $478 at expiration.

Now remember that we’re only using a few contracts.  This is just fordemonstration.  I’m showing how you can make money even with smallamounts of contracts.  If I was doing ten times as many contracts, obviously I’d have a guaranteed profit of $5,000.  I mean it doesn’t get any easier than this.

The upside to this and the real potential these types of three-legged box in locking the box positions is that not only are you guaranteed a profit if the market doesn’t do anything,but if it starts to go up dramatically or if it starts to drop dramatically, it doesn’t matter.  The market can go up or down and you can make an unlimited amount of money.  Here’s the profit area.  Your zero line is down here.  You have nothing but profit whether it goes down or it goes up.

So that’s the power of thekind of trading that we do.  You try to hedge your positions asmuch as possible.  You try to manage the risk.  We manage these risks by the numbers.  So in other words, when we first put on our IWMposition, we looked specifically at the delta.  I wanted to be long a certain amount of delta because based on the analysis that we doon a regular basis, and you see those in the technical analysis modules, we knew the market was going to go up today.  Just like we knew it was goingto go down earlier in the week on Monday and Tuesday.  Today is June 5.  We knew over the weekend that the market was going to decline.

Wetook a position that gave us an opportunity to lock in these profits.  So we locked in the profits on the downside and we knew the market was going up.  Now we’ve locked in our profits on the upside and it doesn’t matterwhere it goes because we’re guaranteed a profit.

I have never seen anybody else explain this concept in 20 years of trading and going to all of the seminars and the marketing stuff that these people put out.  This is a pretty dynamic way to trade because you can’t lose money at this point.  You have no other costs.  You initiated the positions.  You have no other costs at all because all of these are June expiration contracts and in the next week-and-a-half they are going to expire and you are guaranteed at least the $500 profit.  And remember, as I said we’re only doing small contracts.

So that’s how you trade with confidence.

This is the kind of information that you aren’t going to find anywhere else.  As we go through these types of trades in the future, especially after we get through Module 11, you are going to see the dynamics of how to lock in profits on just about any kind of position that you have.  And not only lock in profits butgive you unlimited upside or downside potential.

So that’s it for today, guys.  Hey, trade with confidence

 

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Index Options: Earn a Living Trading Options – Video 6

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Good morning tradeologists.

Today is Monday, May 12, and we’re going to take a quick look at our trades for today.  Now we’re going into expiration week and, as I mentioned, we had a little insurance policy on the QQQs just in case we got a big drop in the markets over the weekend.  It cost us $65 but that’s cheap insurance because we’re already up over $140 for today.  We have an open profit of $935 dollars.  Let’s take a quick look at our analyze tab.  That $65insurance was well worth it because we made up more than that just in the profit today as we open and it really didn’t cost us anything at all and the insurance was very, very good for us.

So here we are today.  Like I said, we’re up $135.  We are moving back towards the center very nicely on our position.  We are going to keep a close eye on this position.  Of course we are in expiration week and I normally like to get out earlier.  However,we are going to try and squeeze every little bit of profit out of our positions as possible.

We have the positions on the DIA, the EEMs, the IWM, and the SPY.  We want to take a quick look at the VIX.  Let’s take a look at where we are.  We went up here a little bit.  If you can take a look down here in thecorner, we’ve been dropping significantly.  Well, I didn’t know for sure but I thought possibly we could  jump up here and retest this level around $21.50 or $22.00 and that didn’t happen this morningso that’s why we closed out our insurance.  We bought the QQQs as insurance and we closed those out early this morning when we saw that, in fact, the market was not going to drop like a rock and retest those VIX levels so we’re falling back down again.  I think we’re going to retest these 18 levels so we should be up for the day.

We’ll see exactly and keep monitoring our position but at this time we don’t really have to do anything as long as we stay to the upside.  We’ve got plenty of room to move to the upside here and we’re going to continue to make a profit on this position today.  We should be close to $1,000 in open profit.  Now remember we’re only trading one or two contracts so this is a pretty good profit and all we have to do is just be patient and wait.  This white line here which is our current profit and loss position is joining the expiration green line here which is only 5 days away.

Let’s take a look at our monitor tab or our trade tab and we can see there’s only four trading days left in this position.  Ideally we’d like to be at the center and all of our positions would expire absolutely worthless and that will give us the maximum profit.  So we just have to sit back, relax and just monitor.

Normally during a trade when you’reputting on trades 30 to 40 days ahead of time, you don’t really have to be that concerned with the day-to-day market fluctuations but as we get closer to expiration that’s where you really want to pay attention to your position.  So that’s what we’re going to do if you want to extract as much profit as possible.  However, I do not recommend holding positions into expiration week.  Price is the biggest risk during expiration week.

Let’s take a quick look at our monitor tab for a second and take a look at our numbers.  Our delta is a very nice little positive 94, our gamma is  190, and all gamma really means is that it’s the amount that the delta is going to change based on the overall position.  Theta has increased to a nice $129 a day.

So going into expiration week we should expect to collect another $128 every single day that we’re in expiration.  Our vega is at 121and that’s a positive number, meaningthat if the vega goes up we will increase our profits by $121.  However, given that delta is also a positive number they kind of neutralize each other there.  So what we want to do in our current profitable open is 925and we want to just take a look atour analyze tab for a second.  As long as we can continue to move up, where the Dow Jones is right now up about 30 points, we will be doing very, very nicely. We’re going to keep an eye on the market very closely.

We want to be able to stay in the center position and I think we’re going to be in really good shape to extract some moreprofit.  Now let’s take a quick look.  We are here and we’ve got $934 of profit in the position and if we go to expiration we’ll have about$1,800 if we stay stable as far as price goes.  So we’ve got another $900 in profit that we could extract from this position and we’re going to try to hang in there as long as we possibly can.  I mean I don’t want to get too greedy but we’re at 50 percent profit here.  We’re also up about 30 percent on our margin because our margin is $3,600.  We’ve got $900 profit on $3,600 of margin.  That’s a 30 percent return on margin so we’re doing really, really well.

Price doesn’t seem to be too much of a risk right now so we’re going to hang in there.  If things start to get a little bit more volatile, we’ll probably close out this position.  You know 30 percent return on margin is pretty awesome.  We’ve only been in theposition for about four weeks now so that’s a great monthly return.

All right tradeologists, hey trade withconfidence.

 

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