Real-time options education and strategies
Note: I added an update at the end so make sure you read the entire post! If you listen to most ‘experts’ they’ll tell you to spread out your risk by placing many smaller trades to reduce your exposure. I used to do that until I realized that was exactly the wrong advice for me. … Read more
In the past I’ve highlighted many times the importance of the 8 and 20 SMA bands for analyzing price action. I’ve just recently introduced you to the 1.5 standard deviation 20 SMA Bollinger Bands. The Bollinger Bands can add another dimension to your analysis because many of the strongest directional moves occur well away from … Read more
The Condor is one of the most powerful option strategies for generating a very favorable reward/risk ratio. It can offer generous amounts of long (positive) Theta as well as short (negative) Vega. Being short Vega tends to reward a position where the underlying instrument’s price grinds higher. That is why I often utilize an out-of-the-money … Read more
Lots of traders like to day trade. Some like to swing trade. Most don’t know how to decide between the two. So here’s a thought; how about I let the price of the underlying instrument determine that for me? How’s that work? Read on and you’ll find out! On that risk profile (above) of day … Read more
This post is going to demonstrate how I use Call Condors to initiate longer-term (typically 3 months to 1 year) positions with relatively little directional risk when the trade is first placed. It is a trade that is designed to profit from a trending stock. If you look at the Thinkback chart and risk profile … Read more
My entire option trading method revolves around the concept of the Delta Hedge (DH) strategy. Any new option trade that reduces the Delta (directional) risk of a current position is technically a DH but my particular strategy is to first buy a single option (Call or Put depending on the expected direction) or a spread … Read more
When initiating a new trade I often start by buying a 30 Delta option. What’s so special about 30 Delta options? Many option courses recommend buying in the money (ITM) options of 60-80 Deltas. Are they wrong? Yes…and no. It depends on what you are trying to achieve. My system for trading options is all … Read more
This is a simple but effective strategy that builds profits while reducing risk or, in this example, actually locking-in a minimum profit. The system can be adjusted to make fewer trades but I used these parameters to illustrate the concept. These are the actual prices of BABA beginning on 1/4/2021 as shown on ThinkBack. The … Read more
Before I go into the specifics of these trade scenarios using the SPX daily chart I want to make the point that I use the same strategy with the same parameters on charts on all time frames. The levels referenced in this post are based on the prior candle so the same analysis applies to … Read more
This ThinkBack simulates establishing a long (bullish) option trade on 12-31-2020. Comparing buying a 60 Delta Call to a 30 Delta Call. If I want to compare the actual Deltas I would have to purchase two of the 30 Delta Calls so that both positions start out with approximately 60 Deltas. However, one of the … Read more