The best option strategies that every
options trader should know. My name is
as simple as possible because the reason
why you're watching this video is you
want to make money so the option
strategies that you need in order to
make money is first you need a watch
list and you should keep your watch list
as small as possible if you have any
count that's below 10,000 you should
trade at a maximum two securities
probably only one you should choose
Facebook and then just watch it that's
it and then you get comfortable with the
trading range if you open account that's
between $10,000 and $50,000 you should trade
too if you have something between a
$100,000 and $300,0000 you
should trade a maximum of three
also have on my watch list Goldman Sachs
PayPal you know I have like recently the
gaming stocks on a TV I like ttwo so the
first strategy is eliminate all
distractions have a very small watchlist
don't get tempted by like Nvidia or
Tesla or Netflix or trading futures or
very small watchlist the second thing
the second strategy is get comfortable
with the trading range Facebook right
now is trading
175 its training range over the past few
weeks has been the high of like 180 and
a low-end it's been on 170 I will then
wait for Facebook to fall to 172 and
then I will sell an option with a strike
price of a hundred and fifty eight
dollars that expires around six weeks in
the future and I'll collect around a
dollar 20 a share or $120 per contract
that's pretty much the strategy but
being extremely disciplined is another
point that you have to do now the third
strategy is you only want to trade naked
options unless you're going to trade a
super expensive stuff like Amazon that's
going to reduce your buying power butt
naked options contrary to what a lot of
people tell you are way safer than
vertical credit spreads because with a
naked option you maximize the amount of
credit and premium that you receive it's
extremely easy to roll and manage a
naked position relative to a vertical
credit spread and also you are
inherently protected against you're a
natural greed or your natural tendency
to be greedy when you trade a vertical
credit when you trade a naked option
versus a vertical credit spread because
a lot of people where they get in
trouble is those sell to naked options
with them with a vertical credit spread
they'll sell 20 of them and then when
the option trades in that no-man's land
below the foot that they sell and above
the foot that they bought when they sell
too many contracts of vertical credit
spread they end up losing six months or
a years worth of games so only trade
naked options
so to recap you want to keep a very
small watch list again if you have an
account that's under ten thousand
dollars you want to trade a maximum of
two and even if you only trade one
security that's good enough you can make
thirty to fifty percent every single
year by trading one security then you
want to get comfortable with its trading
range its recent trading range you want
to wait for it to fall in the low end of
the range you want to trade naked
options and let's say Facebook like as
an example is trading at 175 its trading
ranges 170 to 180 you wait for it to
sell to trade down
172 then you sell a naked put option
with a strike of 158 you collect a
dollar 20 and share that will expire six
weeks in the future that trade is
profitable around 95% of the time that's
pretty much it that is how you make
money in the stock market you the real
trick to making money in the stock
market is to be disciplined and you
don't want to get distracted
I don't read any articles when a student
messages me about Netflix or Tesla or
and video or something like that I just
ignore it
I don't read any articles I don't try to
compete on information I don't get
distracted I just do this every single
try to keep it simple I know that you
probably have other questions about oh
do you look at the deltas you look at
the Ivy do you look at the you know the
relative IV or the implied volatility
and like all that so I don't listen I
don't I don't look at any of that shit
and the reason is that all of it is
reflected in the price that you receive
when you sell options so for example if
there's very high implied volatility
that instead of receiving a dollar
twenty a share I'm gonna receive a
dollar sixty and those statistics that
you're quoted about like you know the
standard deviations and the probability
of profit they're inherently very
inaccurate one standard deviation
they'll tell you that your if you sell a
put option that's one standard deviation
away it tells you that it should expire
worthless 68% of the time but the
reality is it doesn't around it expires
worthless like 72 or 73 percent so you
have to make a judgment call and not
rely upon indicators and all of the
information is reflected in the amount
of premium that you're going to receive
so you essentially just make a decision
and say okay am I do I think it's a good
trade for me to agree to buy Facebook at
1:58 and do I think that me being
compensated a dollar 20 a share is worth
the risk that I'm taking to buy Facebook
at 1:58 when it's now trading at 172
that's pretty much what the question
that you ask yourself if the answer is
no then you wait for this dollar 20 a
share to increase to a dollar 40 if the
answer is yes and you make a trade all
right that's how we make money the stock
more
this is David Jaffee from BestStockStrategy.com
BestStockStrategy.com if you have any questions let
me know you can go to the website and
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