Though you are able to sell a corresponding call credit spread should the market challenge your short strike prices. Risk Management: Keeping your position size small from the start should all the risk management you need. Targeted Timeline: You should look to enter these trades between days out to give yourself enough time and premium. Volatility & Time Decay: Since we are net sellers of options a drop in implied volatility will generally help this position as well as increasing theta decay as we get closer to expiration. The combination of options should result in a net credit. These are high probability strategies where you are a net seller of options below market price and you are looking for those options to decay and value and become worthless at expiration.Ħ Trade Setup: Sell 1 OTM Put Buy 1 OTM Put at Lower Strike Price. Easy peasy right?!Ĥ text High IV Bullish Options Strategies If you are bullish on the underlying direction of the stock and implied volatility is over the 50th percentile you ll choose from the following options strategies.ĥ Put Credit Spread Bull put credit spreads are strategies that are designed to profit from both a one-way directional move up in the underlying stock and a drop in the underlying implied volatility. Is volatility above or below the 50th percentile? Step #3 : Narrow Best Strategy The final step is to choose a strategy from the grid below that fits that particular stock situation and your personal portfolio. Step #1 : Market Assumption The first step to finding the right strategy is to figure out what your directional assumption of the stock is are you bearish, bullish, or neutral? Step #2 : Implied Volatility The next step is to find the current level of IV and determine the current IV rank percentile. There are good and bad strategies for each market condition and now can quickly and easily find the right strategy for the right trade. All Rights Reserved.ģ Our 3-Step Process Choosing which option strategy to use for a trade is a process of elimination, not selection. Though a long-time resident of Virginia, he currently lives in Pennsylvania with his beautiful wife and daughter. He was recently featured in Barron s Magazine as a contributor to the Annual Broker s Review and is the head trader here at Option Alpha.
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His training courses and coaching programs have helped thousands of traders from around the world learn how to make smarter options trades. Before launching Option Alpha more than 8 years ago, he was an Investment Banker for Deutsche Bank in NY with the Mergers & Acquisitions group, a Capital Markets Analyst for BB&T in DC covering REITs and a Senior Loan Officer in the mortgage industry. All Rights Reserved.Ģ About the Author Kirk Du Plessis is a full-time options trader, real estate investor and entrepreneur. Ninjatrader strategy builder trace orders signals.1 text The Ultimate Strategy Guide Published by Option Alpha.Option Alpha Trading Strategies PDF on Option Trading Rules.Don't Use A $6,000 Trade To "Practice" Trading Options.How To Manage Your Money & Generate Wealth The Right Way.Are Your Current Technical Analysis Indicators Slowly Destroying.Launch of SIGNALS Technical Analysis Report.
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Quickly find the best indicator that fits Option alpha signals pdf download free Not Ready Yet? We examined technical analysis in its purest form.
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