Options trading strategies using
RobinHood that worked for monthly income
I graduated from the Ivy League
university I worked on Wall Street as an
investment banker I completed around
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video if you have any questions you can
leave a comment below and I'd be happy
to answer it so I made another video
about RobinHood where I actually don't
like the platform I don't think that
serious traders you should use RobinHood
RobinHood however I do believe that beginning
traders who want to learn can use RobinHood
RobinHood right and there's no problem with
using around wounded except for the fact
that it doesn't allow you to sell making
options and I believe as I mentioned
numerous times before that people who
tell you that naked options are more
risky than vertical credit spreads or
other things they are not profitable
traders you should ask them for their
way safer than selling vertical credit
spreads because we maximize your the
amount of credit that you receive it's a
lot easier to roll and manage the
position and it also by selling naked it
embraces the inherent desire of human
beings to be greedy so it limits the
number of contracts that you sell
because you have substantially more
buying power reduction when you sell
naked options that's compared to
vertical credit spreads however this is
a RobinHood video and it doesn't allow
you to trade naked options so what can
we do the first strategy is we're gonna
sell vertical credit spreads alright I
do occasionally trade vertical credit
spreads you'd probably use it it's
probably around 10% of my trade mostly
because I always have a position on in
Amazon and I do like to use a vertical
credit spread for Amazon because using a
vertical credit spread reduces the
buying power reduction and
zon is a $2,000 stock as of September
2018 however all these strategies I'm
telling you they are good for until the
end of time so it doesn't matter if
you're watching this in 2020 to 2025 it
doesn't matter this is still gonna work
alright so vertical credit spreads what
you should do is if you have a small
account you should watch and have like
you know five securities on your
watchlist at one time you should only be
trading a maximum of two securities
preferably one so you have five
securities on your watchlist maybe
Facebook Lockheed Martin Boeing PayPal
and one of the gaming stocks let's say a
TV I write like Activision Blizzard so
you'll have five you have those five
securities on your watchlist and at any
one time you're gonna have a position on
maximum of one maybe two but I would say
one you know you only have a position on
it one I'm one of those securities at
any one time with a small account so
Facebook right now is trading at 175 I
think that's a relatively good time to
enter in a new position on Facebook
let's say is trading it falls below like
$172 you can then sell a put with a
strike price of $158 and because this is
RobinHood you would then have to sell a
vertical credit spread so you'd have to
buy a lower price play I always focus on
the entry point whether I'm selling a
vertical or a naked option the higher
price put that I'm selling remains the
same so I would sell a naked option with
a strike price of 158 and if I was
turning it into a vertical credit spread
I would choose I would choose the same
option 150 $8 strike price for Facebook
now to turn it into a vertical I would
probably choose like 150 all I'm doing
with the vertical credit spread is I'm
trying to choose an option that would
reduce my buying power reduction that
also doesn't cost that much money
alright because you know that with 99%
certainty that vertical credit spread
the option that you're buying is going
to be wasted money so you might as well
turn Facebook from 158 dollar stock to
an $8 stock which means
you're buying 150 dollar put but you're
selling 150 a so the difference between
that is $8 but at the same time you
don't want to buy a lower price option
that is going to substantially reduce
the amount of premium that you receive
so for example if you receive $1 per
share by selling 150 $8 put then you
want to make sure that the 150 dollar
put that you buy doesn't cost any more
than like 15 cents that means that on a
net basis you will collect 85 cents for
that trade all right the second strategy
that you should use is you have to make
sure that you allocate your capital and
you have very good capital efficiency
for example let's say you sell that put
up the vertical credit spread on
Facebook and it expires in six weeks
then let's say Facebook goes up to $185
two weeks from now and that credit
spread that you sold for a net dollars
of $85 of an 85 cents a share is now
trading at 15 cents meaning that you can
buy it back and for 15 cents you can
realize let's say you know 85 cents so
you you you've been able to realize
around 80
you know like 80% of the profit yet
you've only had to spend and have your
money be at risk for half the time so
you got 80% of the profit and only half
of the time and if you wait the
incremental three weeks you're only
going to get the incremental 15 cents a
share in my opinion that is not a good
usage of capital you should close out
that position you should then look at
your watch list and maybe Goldman Sachs
is trading down from 235 and it fell to
220 or maybe a TVI has fallen or maybe
Boeing or Lockheed Martin is fall and
then you can enter a new position at
that time remember this is very simple
we want to keep things as simple and
easy as possible and you can make money
in RobinHood but you shouldn't be
buying options you need to sell vertical
credit spreads in RobinHood manage your
capital efficiency and ignore all the
noise one major flaw that I see in RobinHood
RobinHood is if it's become so popular that
I'm part of the Facebook group just
I'm very interested in human behavior
and I see people I'm taking screenshots
of the winning trades that they make by
buying calls buying calls is like the
most idiotic strategy because you're
just gambling right in order to make
money in the stock market you have to be
the casino not the gambler so again this
is a great way for you to make
consistent money you can make thirty to
fifty percent every single year by
selling vertical credit spreads for the
rest of your life and you will not be
taking that much risk my name is David
Jaffee you can go to BestStockStrategy.com
BestStockStrategy.com and receive $400+
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job and my goal is to be of service to
other people and I'm not doing that
because I'm completely altruistic no I'm
I'm actually doing that because I'm
selfish I know that when I help other
people I'm helping myself and it makes
me feel good about myself
so if you have any questions let me know