Welcome to “The NO.1 SECRET To Be Consistently Profitable Trading Options” by Options with Davis. In this video, Davis reveals the secret that gives premium sellers the advantage in trading options, leading to consistent profitability in the long run. Throughout the video, Davis provides timestamps for different sections, mentions other videos on related topics, and encourages viewers to like and comment. The content focuses on option trading for beginners, emphasizing the importance of using the expected move in option trading strategies. By trading within the expected move, consistent profitability can be achieved without having to pick a direction in the market. Davis shares the results of their trades using strategies like strangles and put ratio spreads, showing profitable outcomes and the effectiveness of these strategies in different market environments. Consistency in profits and trading results is stressed, and viewers are encouraged to subscribe for more helpful videos in the future.
Introduction
Welcome to this comprehensive article on option trading for beginners! In this article, we will explore an important aspect of trading options: consistency in profits and trading results. Whether you are new to options trading or have some experience, this information will be beneficial for your trading journey.
The NO.1 SECRET To Be Consistently Profitable Trading Options
When it comes to trading options, premium sellers have a significant advantage. The No.1 secret to consistently profitable options trading lies in understanding and utilizing this advantage. Premium sellers, also known as option sellers, profit from the time decay and volatility contraction of options.
Unlike option buyers who rely on the price movement of the underlying asset, premium sellers can consistently generate profits by collecting premium upfront and taking advantage of the shrinking time value of options. This advantage allows premium sellers to have a higher probability of profit on their trades.
Another key factor that contributes to the consistent profitability of premium sellers is the use of the expected move in option trading strategies. The expected move is the range within which the stock is expected to move based on its current implied volatility. By incorporating the expected move into their trading strategies, premium sellers can increase their chances of success and avoid the need to accurately predict the direction of the market.
The Options Income Blueprint
As a valuable resource for beginners, viewers can download “The Options Income Blueprint” for free. This blueprint provides insights and strategies for generating income through options trading. By following the guidelines outlined in this blueprint, beginners can gain a solid foundation and start their options trading journey on the right track.
Timestamps
To make it easier for viewers to navigate through the video, timestamps are provided for different sections. This allows viewers to skip to specific sections they are interested in or revisit specific topics as needed. Timestamps provide a convenient way to access the information you need quickly and efficiently.
Other Recommended Videos
In addition to this video, Options with Davis recommends checking out other informative videos on various options trading strategies. These videos cover topics such as the Wheel Strategy, Rolling Covered Calls, Stock Repair Strategy, and Credit Spreads. Each of these strategies offers unique opportunities and can be a valuable addition to your trading arsenal. By exploring and learning from these videos, you can expand your knowledge and improve your trading skills.
Trading within the Expected Move
Understanding and utilizing the expected move is a crucial aspect of consistent profitability in options trading. The expected move represents the potential range of price movement based on the current implied volatility of the stock. By trading within the expected move, traders can aim for consistent profitability without the need to predict the exact direction of the market.
Strangles and put ratio spreads are two option trading strategies that can be effectively used within the expected move. A strangle involves the simultaneous purchase of an out-of-the-money call option and an out-of-the-money put option. This strategy allows traders to profit from price movement that exceeds the expected move in either direction.
A put ratio spread is another strategy that can be utilized within the expected move. This strategy involves selling a higher number of put options while simultaneously buying a lower number of put options. By selecting strikes within the expected move range, put ratio spreads offer traders the potential for consistent profits.
Studying Actual Occurrences vs Probability
One fascinating finding is that actual occurrences within the expected move range tend to be higher than what the probability suggests. This means that traders have a greater chance of profitability than initially anticipated. Tasty trade conducted a study that revealed that the actual occurrences within the expected move range were around 85%, surpassing the expected 68% probability.
The author of the video also shared personal experiences of profitable trades using both strangles and put ratio spreads within the expected move range. These examples highlight the effectiveness of these strategies and reinforce the importance of trading within the expected move for consistent profits.
Put Ratio Spread in Bear Market
The put ratio spread strategy also performs well in bear market environments. During market downturns, when volatility tends to increase, put ratio spreads can be particularly beneficial for option traders. By using this strategy during bear markets, traders can take advantage of increased volatility and potentially profit from downward price movements.
Consistency in Profits and Trading Results
Consistency is key in options trading for long-term success. Consistent profitability ensures that trading results are not based on random chance but are driven by a systematic approach. Utilizing the expected move and option trading strategies within this range can help achieve that consistency.
Trading within the expected move range allows for improved probability of profit and provides a structured approach to options trading. By focusing on managing risk, selecting high-probability trades within the expected move range, and following a well-thought-out plan, traders can improve their chances of consistent profitability.
Conclusion
We appreciate you taking the time to read this comprehensive article on option trading for beginners. We hope that the insights shared here, including the No.1 secret to consistent profitability, the use of the expected move, and various option trading strategies, have been valuable to you.
If you found this article helpful, we encourage you to like the video and leave comments or questions. Feel free to subscribe to Options with Davis for more informative videos on options trading. We appreciate your support and promise to continue creating valuable content to assist you on your trading journey.