Trading Weekly Option – Romancing The Spread Trades To Create Weekly Options Returns

Standard call options was first introduced in 1973. The standard call options was born because of the CBOE or the Chicago Board Options. Put option become available into the market after the standard call options took place. The put options became very popular. Their popularity was manifested in the increase of trading volume which actually increases at a compound annual rate of growth over 25% between the years 1973 and 2009. The significant increase really portray that the investors know how to deal with the options. The overall increase was brought about by the familiarization of the investors on using these options.

The Chicago Board Options Exchange brings a new class option called Weekly Options in year 2005. Thirty two years after the first introduction of call options weekly options were introduced. The weekly options were called by investors as “weeklys”. “Weeklys” can be compared to monthly options by the investors. Weeklys only last for eight days while monthly options are not. The weekly options are introduced every Thursday and eight days later, Friday of the following week, they expire. Monthly options has twelve monthly expirations and expires every third Friday of the month. Weeklys per year has at least fifty-two expirations.

Options can be implemented with various strategies. Different tactics are currently available according to your chosen options. What are the best techniques for weeklys? With the case of weekly options, you can do just about any strategies that you actually use with longer dated option or monthly options. You may notice that these techniques can be done four times monthly for weeklys. While for monthly options, it can be only done once.

Investors are taking advantage of the final week of an option’s life. Having many time decay curves is one of the advantage of using weekly options. Investor earn twelve times when considering monthly options. Weekly option investments are given fifty-two times payment per year.

You may use the same strategies (like the Calendar Spread) for monthly and weekly options. You can sell naked puts and calls. Condors, spreads and covered calls are typical strategies that can be use for options. These strategies work well with the weeklys and also with the monthlies. The only difference is that they have a shorter time line.

To study how to appropriately trade Weekly Options Methodology for ongoing monthly earnings, go to this Gamma Scalping website and catch our Free Video and download our Free Report.

categories:

Playing Weekly Options – Riding The Option Spread To Net Weekly Options Gains

The Advantage of Weekly Options

Short-term advantage can be derived from Weekly Options than monthly options. Being a short-term investment, weekly option provides its investors the freedom to anticipate price changes and movements.

For instance, investors can make specific investments on EFG stock because it would be better financially on a certain week. Going into a monthly option can be risky and your three weeks worth is at stake for that investment. Weekly option can be advantageous on minimizing risk since investments’ duration is limited. Weekly options can still be a viable option because it saves your money and provides good return if correct investments were chosen.

Most of the time, monthly option open interest and volume is higher than with weekly options. Monthlys have better pinning action than weeklys. Pinning action is an event when a price of stock went up due to a strike price on its expiration day.

Disadvantages of Trading The New Weekly Options

Of course, weeklys has its own disadvantages. One disadvantage is its short duration and quick time decay. There is no much time to fix mistaken investments. You will have a difficulty in adjusting your strikes or do some kind of mean revisions in the underlying security. Another thing is that not all of the strikes in the weeklys will have good open interest and volume. The strikes may bring extended effects that are not beneficial for short-term strategies.

Wrap Up

Investors of weekly options should know its advantages and disadvantages – especially when getting involved in Gamma Scalping. Investing on this kind of instruments may provide profit or loss. Investors should have full understanding of what they are doing and the risks involve in order to be successful.

To discover more about this Weekly Options method, click over to this Butterfly Spread Training Website for dozens of free training videos, samples, and tutorials on how to fittingly start, exit, handle and adjust Gamma Scalping Strategies to create a reliable monthly income.

categories:

Butterfly Spread: Churning Out Monthly Cash Flow

A great system for option traders who feel the underlying instrument they’re working with will probably be range bound for the next 2, 3, or 4 weeks of time or so is the butterfly spread .

This theta positive option strategy produces profits when the stock or index that is being traded remains within a contained range on the graph or ends up on expiration day at or near the short strikes of the trade.

Here is an illustration of this tactic:

Buy 5 contracts of SPY 100 calls. Sell 10 contracts of SPY 105 calls. Purchase 5 contracts of SPY 110 calls.

These trades can generate quick gains for the investor as a result of the short strikes in the position (the strikes that have been sold) providing so much premium into the traders account. This is because the strikes that are usually sold in these trades are the ‘at the money’ strikes – or the strikes that reside closest to where the underlying is actually trading at when the trade is first put on. The ‘at the money’ strikes always contain the most amount of time premium, which is what option traders are looking to benefit from when trading these type of income positions.

While you can find numerous mutations of the butterfly spread, the two most popular are the standard butterfly distribute which is traded for a debit, and then there’s the iron butterfly, which is put on for a credit. It is true that these two individual versions of the butterfly spread are indeed different, if you would look at the risk graph of one and then compare it to the other, they would look exactly the same, and they actually perform the same as well.

The butterfly option strategy is a ‘delta neutral’ strategy, meaning that investors who use this technique do not have an opinion on market direction or believe that the underlying being traded will remain in its general location on the chart for the duration of the trade.

With the proper knowledge, the butterfly spread can be a lucrative, low pressure, and pleasant investing system that doesn’t require one to be glued to their computer screen stressing out over every tick of the market all day.

To find out more about this strategy, visit this Iron Condor Training Website for tons of free training videos, examples, reports and easy step by step instructions on how to trade the Butterfly Spread to generate a consistent income.

categories:

Double Calendar: What Goes Down Must Go Up

Even though Double Calendar Spreads can be utilized in various stock market circumstances, they function finest in low volatility situations. Increasing volatility levels help these trades, while sinking volatility winds up hurting them.

Mainly because calendar spreads churn out profit the fastest at neutral to rising volatility levels, some calendar spread traders will wait to make a trade right up until an underlyings volatility either reach the lowest level of their average range, or until they move into the lower third area of their normal volatility range.

By waiting for these lower ranges, the calendar spread trader is increasing his or her odds that the volatility levels will either remain wherever they’re and not go much lower which could wind up hurting the trade, or will start to rise back up which could put their calendar trade into significant earnings pretty swiftly.

Typically volatility levels move down because the marketplace heads upward and volatility levels go up because the marketplace moves down. This is why calendar traders will usually put on calendar spreads when they have a bearish view on the stock market or on the underlying asset they are trading.

A popular method for option investors with a bearish outlook is to place a calendar spread slightly below where the market or stock is trading at, with the expectation that as the market or stock does head downward, not only with the underlying move directly into the sweet spot of their calendar position, but the volatility will also rise, super charging their calendar trade into a very good profit.

This method can also be used with double calendars, and in fact many option traders would argue that it would be preferred. Using a double calendar could increase the probability of taking profit from the trade as it could be placed with a skew that would not only create a wider sweet spot inside the profit tent for the underlying to get caught in, it could also supply an extended profit tent coverage over the area where the underlying is trading at when the trade is first initiated, providing a safety net if it turns out that the traders speculation on direction turns out to be incorrect.

To find out more about double calendar , visit Ted Nino’s site on how to correctly enter, exit, manage and adjust a calendar spread trade for consistent income.

categories:

Butterfly Spread – Milking The Butterfly Spread For Consistent Bling

The butterfly spread trade – with is a trade made up from puts and calls , is a preferred strategy with option income enthusiasts. Not only does this trade give the trader a substantial quantity of premium at the start of the trade which might be parlayed into an important monthly cash flow, it also provides an extremely effective position structure which can put up with and tolerate a variety of trading circumstances, including particularly volatile situations like the ones we are seeing now. In a wild stock market exactly where a lot of other option methods do not have a chance, the butterfly spread may be put on and if appropriately monitored, come out smelling like a rose.

When you look at a risk graph of the buttefly spread, you will see that the butterfly payoff is tremendous – specially when analyzed side to side with other option income methods – for instance the iron condor, the credit spread, the diagonal, double diagonal, the calendar, double calendar, and so on.

Depending on exactly where the wings are placed on these trades, or to put it differently, how close or far the long options are puchased in relation to strikes sold, it’s possible to develop a butterfly trade where by the possible reward is numerous times more than the danger taken on.

Nevertheless, in the occurances where the reward is numerous times greater than the risk being assumed, it is due to the fact that the wings that are being purchased are incredibly close to the strikes being sold, creating an incredibly tall yet really narrow ‘profit tent’ which the underlying has to remain inside of to realize that massive payoff – which the odds will probably be incredibly low.

Even so, if the underlying remains inside the overall space of this tall, narrow profit tent – plus the trader does not plan to stay with the trade all of the way until expiration day – a good earnings can still be extracted from these lower probability straddles trade as the zero day income line on the risk graph soars up pretty rapidly and a first rate return is usually grabbed within a short level of time.

Ted Nino is an option selling evangelist – particularly fanatical about trading straddles , the Double Calendar, the Credit Spread, and the Butterfly Spread. Visit his puts and calls Blog to learn more about these option strategies.

categories:

Credit Spread – Oh Man, I Want My Mommy…

The Credit Spread Option Trading Strategy is perhaps the most dangerous option strategy around.

The thing is, when rookie option traders first hear of the credit spread – very few seem to able to resist the temptation to jump right into trading them – with too much real hard earned money on the line – and not nearly enough education.

And unfortunately what always seems to happen to a high percentage of them is that they promptly wind up getting their trading accounts demolished and their heads handed to them on a platter.

Now wait -

Let me explain something here before you start to get the wrong impression.

I absolutely LOVE credit spreads. ALOT. In fact, the credit spread is right up there as one of my favorite trading strategies.

I think that the credit spread really IS a great trade.

And yes, I absolutely believe all those stories and claims you hear swirling around about credit spreads generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.

The problem is – there is something big that is being left out of all those claims and stories – and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations.

See, while it may be true that the credit spread and iron condor strategies can kick off yields of over ten percent monthly and that they favor the trader by offering high probabilities of winning (in some instances as high as 80 and 90 percent) – what isn’t being talked about is the risk to reward ratio of these trades – which can be as high as 10 to 1.

That means that while trading these trades you are putting at risk 10 bucks for the chance to make just 1. Or – in reality, in the instance of say a standard ten lot index iron condor, you are risking ten thousand dollars for the chance to make just one thousand dollars.

And as mammy used to say to us kids – ‘that ain’t nothin but a real awful bad egg’.

Just do the math. With a risk to reward like that, even with the great probabilities and wonderful monthly returns – before long a problem month could come along and completely wipe out your entire account!

But…

All isn’t lost. There IS hope…

Because – as I wrote previously – I REALLY DO like the credit spread strategy.

And – I consistently make money from it.

So obviously there’s a way around that horrible risk to reward issue and the inevitable problematic losing months.

And there absolutely is.

It all has to do with the management of the trade.

As soon as you discover the ‘right way’ to place these trades initially – and then how to properly go about managing and adjusting them – that risk to reward dilemma instantly vanishes and goes away.

Once you possess the correct credit spread trading knowledge and know how – and understand how to apply a couple super easy to implement adjustment tricks – you’ll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the Credit Spread strategy for all that it’s ‘actually’ cracked up to be.

To learn these ‘tricks’ to trading the Credit Spread , go to this Weekly Options site and watch our free video. It will show you an extremely simple method for properly placing, managing, and ADJUTING credit spread option trades.

categories:

Iron Condor – How To Lose Your ENTIRE Trading Account Quickly

The Iron Condor is perhaps the most dangerous option strategy around.

The thing is, when rookie option traders first hear of this strategy (perhaps from a late night infomercial or free hotel seminar conducted by slick salesmen touting it as the greatest thing since sliced bread) – very few seem to able to resist the temptation to jump right into trading them head first – with actual real hard earned money on the line – and usually way too much of it.

And it seems that a good percentage of them – if not most of them – promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad.

Now wait -

Before you start to get the wrong impression, please, let me clarify something here.

I absolutely LOVE iron condors. ALOT. In fact, the iron condor is right up there as one of my favorite trading strategies.

I think the iron condor really IS a great trade.

And yes, I absolutely believe all those stories and claims you hear swirling around about iron condors generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.

The problem is – there is something big that is being left out of all those claims and stories – and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations.

See, while it may be true that the iron condor and credit spread strategies can kick off yields of over ten percent monthly and that they favor the trader by offering high probabilities of winning (in some instances as high as 80 and 90 percent) – what isn’t being talked about is the risk to reward ratio of these trades – which can be as high as 10 to 1.

10 to 1! That means that in order to try and make just one dollar, you need to be willing to risk ten. Or, put another way – in order to make 100 dollars, you need to risk 1,000 dollars. Or – risk $10,000.00 to hopefully make just $1,000.00!

And as my dear old mammy used to say: ‘that smells a lot like an awful bad egg’. Which in fact it is. That risk to reward ratio is nothing but a low down, no good, smelly rotten deal!

Even with the ten percent monthly returns and the high probabilities – all that needs to happen is for a problem month to come along (and it WILL, believe me) – and the next thing you know you’ll be staring at a gigantic loss and a zero balance account!

However…

There is still hope…

Like I said before, I LOVE the iron condor trade.

And – I consistently make money from it.

So apparently, even with that atrocious risk to reward quandary, there must be a method to generate consistent income with this trade.

And there absolutely is.

It all has to do with the management of the trade.

As long as you learn the correct way to initially place these trades, then combine that with a super simple management technique and a few easy adjustment tricks – this risk to reward issue can be completely eliminated and no longer presents a problem.

Once you possess the correct iron condor knowledge and know how – and understand how to apply a couple super easy to implement adjustment tricks – you’ll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it’s ‘actually’ cracked up to be.

To learn these ‘tricks’ to trading the Iron Condor , go to this Iron Condor site and watch my free video. It will show you an extremely simple method for properly placing, managing, and ADJUSTING iron condor trades.

categories:

Gamma Scalping – Cashflowing Volatility

Many option income traders think that when markets are volatile they need to stay out of the game. Not so. Enter Gamma Trading. Here is a little known option trading strategy that can provide consistent profits from markets that seem too wild and choppy to use the usual strategies like iron condors, calendars, and credit spreads.

This strategy is initially set up to profit no matter what the market winds up doing. If the stock or index being used immediately goes up or down, a gain should be realized either way. Then, using the gamma scalping adjustment technique, the trader can lock in those gains, capturing the profit, and then immediately ‘re set’ the trade to once again make a profit no matter what the stock or index being used winds up doing.

Similar to a straddle, when using this strategy, we don’t care what the market ends up doing. We are properly set up to profit either way. Up or down, it doesn’t matter. The underlying just needs to move.

After a predetermined profit has been realized from a move in either direction, a quick adjustment is made to the trade to lock that profit in forever. And, this same adjustment re sets the position to kick out even more gains no matter what the stock being used ends up doing, even if it just moves right back to the same spot it started from when the trade was first put on. The best part is that this simple technique can be used over and over again on the same trade – constantly chipping out cash from the same position.

If you have ever put on a directional trade, actually started to make a profit, then watch your stock promptly turn around and head right back to where it started from erasing your gains, gamma scalping is a strategy you should look into.

Trading this way takes so much stress out of trading – and actually makes it quite enjoyable. Gamma scalping allows one to not have to be right about direction and still have the ability to be very profitable. Wether the market heads up or falls down – we don’t care. Either way we can make money.

During wild crazy times, especially like the extremely volatile markets we are currently experiencing in the markets, Gamma Trading should be considered a ‘must have’ method for option traders to learn how to use correctly.

And last but not least – it’s a really fun way to trade as well.

Want to learn more about gamma scalping ? Then visit iron condor to find the best option trading free tools and training.

categories: