How to make money trading options with
naked options this is David Jaffee from
BestStockStrategy.com my goal in this
university worked as an investment
banker on Wall Street for around five
years have been trading for over 20
years and I probably completed as an
investment banker around $5 billion or $10 billion
very fanatical about constant
improvement so my goal is I know that
you experience a lot of videos with fake
gurus and people telling you that you
can make money by memorizing three chart
patterns and engage in technical
analysis and forex and penny stocks and
Futures Trading all that stuff doesn't
work. If I traded any of those
things regardless of how much I studied
I would lose all my money so hopefully
you're not engaged in that and hopefully
you are interested in learning how to
trade options and you also realize that
the only way that you can make
consistent money in the stock market is
by selling options and that's where I
think we differ there's a few people who
I don't really have much respect for
like Jason Brown and so he sells his
program he always tells people to buy
call options that's complete BS yeah
occasionally maybe one or two out of ten
times you're gonna have 300% return but
the reality is you're gonna lose all
your money and lose all that premium
than you paid around seven or eight
times out of ten so if you're gonna lose
your money seven to 80 percent of the
options and I really only sell naked put
options the reason is that naked put
options give you a substantial amount of
protection one you collect the most
amount of premium to your inherently
protected by the buying power reductions
with put options from trading too many
contracts and three in the worst case
scenario with a position ends up getting
challenging it is incredibly easy to
roll and manage that position the other
alternative is for you to create
vertical credit spreads I do not like
vertical credit spreads at all mostly
because people are inherently greedy so
instead of trying to discipline the
greed out of your body and out of your
DNA it's much easier just to avoid being
and placing yourself in situations where
you will have a propensity to be greedy
and I can tell you that if you trade
vertical credit spreads and you have a
very minor buying power reduction it's
going to motivate you to sell a lot more
contracts so let's say you would sell a
put on face book at 1:58 and then you
would buy a 150-foot so that's a
vertical credit spread you have eight
dollars of risk but let's say on a naked
position you would sell two contracts
and in a vertical credit spread you
would sell 20 contracts I've seen this
happen and then what happens at face
book falls down to 155 it's in that
no-man's land instead you would get a
signed if you don't roll that position
for those 20 contracts so you would have
2,000 contracts of facebook and then
because your account size might not be
large enough to assume those 2,000
shares those 2,000 shares of Facebook
you would have to close out that
position for a loss instead you're way
better off just selling a naked position
maximizing the amount of premium that
you receive and in the worst case
scenario or Facebook drops like 153 you
can easily roll that position for it and
you don't have an anchor and a drag
that's attached to you where you
constantly have to buy in and out of the
money put and spend and waste your
premium so we always like naked
positions I make
probably 90% of my money by selling
naked put options let me give you an
example of how to make money
alright let's say you have an account
size you should only trade market
leaders all right so you're only gonna
trade Facebook Amazon Boeing Lockheed
Martin a bank GS and let's say like a
gaming sub like a TVR alright in this
example you pretty much have four
trade and have positions on around five
or six stocks at every time if you have
any count size that's below 100,000 you
should have a maximum of two positions
on that's it
choose like Facebook and PayPal Facebook
and Amazon or I mean if you want some
diversification you can trade PayPal and
Goldman Sachs if you have less than
$10,000 you should treat one position
that's it keep it super simple then what
you do is let's use Facebook is an
example Facebook right now is trading at
175 all right
you look at the trading range of where
it's been over the past three or four
weeks it has been trading at 180 on the
high end and the low end around 170 so
what you do is you would wait for
Facebook to fall to around 172 then you
would sell and add the money naked put
option with a strike of around 158 an
expiration that's around six weeks in
the future and you would collect around
a dollar 20 a share or a hundred and
twenty dollars per contract the
probability that you'd be able to keep
that entire $120 is about 97 98 percent
really the trick and the reason why
people don't make money in the stock
market is they're not disciplined right
then it just keeps going up I just leave
it alone if there's no entry point and
it doesn't fall back within the range
and re-establish a new trading range and
trade on the low end I don't enter a
position so what would happen if
Facebook traded up to like 180 right
then what I would do is I would see and
wait for it to establish consistent
trading pattern so if three weeks from
now
Facebook's a new trading range is let's
say between 185 and 249 86 187 at a
maximum of 188 as long as it stays above
188 then I will not touch it I only make
any trades and if it falls or if it goes
let's say it's training range like I
said before in a month is now 188 to 200
and trading at 195 I will wait for it to
fall to 188 and then I will sell a 175
naked put that's it I mean you just have
to be disciplined replicate that trade
try to hit singles and selling naked put
options is by far your best and
statistically significant way of making
consistent profits in the stock market
This is David Jaffee from BestStockStrategy.com
BestStockStrategy.com you can get $400 worth of
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