options trading for dummies in this video you're going to learn
the best options trading strategy and a summary of how to be consistently profitable
when selling options this strategy should allow you to win about 98% of your trades
when trading options you can either buy options or you can sell them in general i prefer to
sell options because i prefer that high probability of profit depending upon which
options you sell it's not uncommon to win between 95 and 98 of your trades when you
buy options your probability of profit is going to be much lower and as a result when you do win
then you're going to have to make significantly more money to compensate for the losing trades
when you sell options it's very similar to
turning yourself into a casino or turning yourself into an insurance company for example
right now it is around august 20th 2021 and i believe amazon's 52-week high is about 37 and
amazon reported earnings about three weeks ago it fell about 230 after reported currently it's
trading at about 32.50 i believe so about 500 off of its 52-week high in that situation you can sell
a put on amazon and agree to buy it and you can receive money for agreeing to buy amazon at a
lower price than it's currently trading at now you get to choose which strike price you want to sell
for example if you agree to buy amazon at 2 900 then you're going to receive significantly more
money than you will if you agree to buy amazon at 2500 so that's the decision that
you have to make in general i like to sell the option that is further out of the money
because it reduces stress and also reduces the likelihood that the position will be challenged
so whereas many people will feel more comfortable selling the 2 900 and potentially receiving
about 15 a share or about fifteen hundred dollars per contract i would feel much more comfortable
selling the 2500 and collecting about four to five hundred dollars for every contract that i sell
what i like to do is keep a small watch list of about 15 stocks and i get comfortable with
their trading range then once i see that one of those stocks is trading at the low end of
its range i will then sell a put if one of those stocks is trading at the high end of its range
i will then sell a call option with call options i'm very careful because it's pretty common that
those call options are going to end up getting challenged because the market has a tendency to
go up more than it goes down as a result if i were to sell a put option that's about 10 to 15
out of the money when selling a call option i will sell one that's about 20 out of the money
and if that call option ends up getting challenged then i feel much more comfortable because i know
that with time eventually that stock is going to pull back and fall below the strike price
because with the put side you have to be a little bit more careful because the velocity of risk is
more to the downside than it is to the upside which means that a stock might go up more than
it goes down which is definitely the case for the majority of stocks there is a saying in the market
that the bull takes the stairs up but the bear jumps out the window and that's why when you sell
a put you're able to receive more premium than you are when selling the call because the velocity of
risk is to the downside so if i sell a call option even if that position were to get challenged
then as long as i keep rolling out that position and collecting more premium and increasing the
strikes then i'm pretty confident that it's just a matter of time until i make money on that position
that's pretty much a beginner's guide to trading options and an options trading guide
for dummies if you have any questions you can go to beststockstrategy.com
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i understand that this video was very superficial in nature and in
the future i will definitely be making much more substantial and much more in-depth videos for you
but this is just like a beginner's guide options trading for dummies type video thank you