Learn how to trade options stocks and ETFs. BestStockStrategy.com I graduated from an Ivy League university worked for five years
as an investment banker.
the reality is that you're watching this video because you want to make money so
stock options ETFs and all the other stuff the reality is that you should
alright so let's keep things simple you
maybe instead of trading negative instead of trading naked put options
you'll have to trade some vertical credit spreads that's totally okay
I prefer naked options because it gives you the maximum amount of premium it's
very easy to roll and manage the position in the 5% of cases when you're
the stock will actually fall below the strike price and also it inherently
protects you from being greedy because it reduces your buying power so you're
not going to trade to many contracts alright so we're going to trade naked
want to do is you want it you want to put together a watch list and your watch
list should have a maximum of 10 market leaders right that have that are very
large companies that have a lot of liquidity for example Facebook Amazon
Boeing Lockheed Martin Goldman Sachs um Activision you know you can use like
Activision ttwo even though ttwo is a lot smaller what else I mean PayPal is
fine I like that you know for a lot ki you can also look at Raytheon but that's
that's pretty much it you know maybe you want to add like Visa but really the
more securities that you add, the more risk that you're taking because I can
tell you that the only ones that I would 100% always have a position in our
Facebook Amazon Boeing and Lockheed that's pretty much it I would say I have
a position 80% of the time in Goldman in one of the gaming stocks I have a
position maybe 50% of the time I'd
reality is that if you have you you have an account that's 100 million
dollars you can make a shitload of money by just simply trading Facebook Amazon
Boeing and Lockheed Martin that's it the best for Security's right there and then
maybe you know for the rest of time you'll have one position on whether it's
that old man or being stock or PayPal so what we do is Facebook right now is
trading at around 175 we assess its trading range over the past one or two
months or you know just let's say like the past month or so over the past month
has been trading like between $180 and $170 so we would then wait for Facebook
to fall down to around 172 then we would sell a naked put option for around one
hundred and fifty eight dollars in exchange we'll collect around one
hundred one dollar and 20 cents a share therefore our net amount of premium
receive or rather our net break-even cost for this will be one six 156 and 80
cents but that doesn't really even come into factor because you're gonna keep
this dollar 20 per share or $120 per contract literally like 98% of the time
so your break-even cost really doesn't matter I don't even like factor that in
when I make a trade I know I don't take that much risk like all the people who
tell you that trading naked options is inherently risky I can tell you that
there is never a situation where it's
haven't onscreen all over the place let's do lucky as an example all right
so Lockheed has been trading at around 320 over the past few weeks its trading
range has been 310 and then it's traded up to around 325 in this situation what
I would do is I would wait for Lockheed to fall to around 312 then I would sell
a naked put option on Lockheed Martin with a strike price of around 295 and I
would sell it to make sure that it expires around 6 weeks in the future in
exchange they would probably pay me around
around between dollar eighty and 220 all right so I would sell a strike at
tonight let's say so right now Lockheed Martin is selling is trading at 320 I
would wait for it to fall to around 312 and I would sell in a good put option
with a strike of 295 that expires six weeks in the future I would collect
anywhere from 180 to 220 so let's say like two bucks per contract and that
would pay me - two dollars rather per share that would then pay me $200 per
contract and this train will be profitable around 98% of the time all
right um the only bad thing with now let's do
Amazon as well the only thing with Amazon is surrounded two thousand
dollars stock so with Amazon I would actually trade a vertical because I I
want to reduce the buying power reduction so Amazon right now has been
it's trading at around 2000 it's gone up a lot so I would actually wait for
Amazon I know that over the past two weeks has gone up from like 1,800 to
2,000 so to be honest I would wait for Amazon to fall to like 1850 and then I
would sell a put with a strike price of around 1650 that expires around six
weeks out and then to reduce the buying power reduction with the same expiration
I would actually buy a put option with a strike price of around 1500 all right
that would probably pay me let's say probably get around three dollars and
fifty cents for this maybe four dollars and for this I think the pain probably
around dollar seventy-five so I probably end up getting around the dollar
seventy-five in you know a net premium for this trade and it would effectively
by selling a vertical it would effectively turn Amazon into instead of
a sixteen hundred and fifty dollars who would turn it into a hundred and fifty
dollar stock I don't like trading verticals but in in
this I was on a situation I would just because there's so much buying power
that's going to be used up by trading a
stocks try to keep calm and sign up and
comment I respond to everyone once again this is David Jaffee from BestStockStrategy.com