Posts filed under ‘Weekly Options’

Option Trading NeverLossTrading Style

In learning how to trade various financial instruments, option trading is the high art or skill of trading and when done right, it can offer you opportunities with limited risk you might not even have thought of.

Stock trading is the easiest way of trading; when you stick to assets, which exchange more than one million shares per day, you automatically receive tight bid/ask spreads and your orders should fill at ease.

Futures and FOREX trading is the next category:  Leveraged instruments, where it is important to understand the rules, obligations and price-moves per time-frame observed. Hence, a bigger step up of what you need to know compared to stock trading.

Option Trading, why do we call it a high art or skill?

You are trading leveraged instruments with lower volumes, wider bid/ask spreads, and you choose from multiple strike prices on Puts and Calls. On top of all, you have multiple combination trades between Puts and Calls, which we spare in this publication and concentrate purely on straight Put and Call buying.

The key to option trading is that you specify the relation to the underlying asset and how you want to benefit when prices go up, down, or moves sideways: hence, you need a system that helps you to estimate expected price moves of the underlying asset:

Example: WYNN-Stock on a trading system where you buy Calls when the price threshold of the buy-initiation candle is surpassed to the upside in the next candle or you buy Puts when the sell-initiation candle price threshold is surpassed to the downside on the next candle.

WYNN Stock Daily Chart with Buy Signals, buy Calls; on Sell Signals, buy Puts

WYNN Trading Example NLT Top-Line

When your trading system gives you the idea of when to enter and exiting a trade: let us take a five bar exit, then you already know the choice of an option to take.

Do you?

When you consider the following, you do:

  • Trade with the price move of the underlying instrument.
  • Do not bring the option into options expiration week; by expecting a 20-percent time decay of your premium paid per day of holding your asset in options expiration week.
  • Choose a meaningful strike price that protects you when the trade is in danger and comes into the money when the trade works out (we teach this in detail in our mentorship classes).

When you buy Puts and Calls this way and you work with a high probability trading system, what will be possible outcomes:

  • When the trade continues as originally expected, you have a good chance to achieve a 70% – 200% return on your investment.
  • When the trade goes wrong, you lose about 80% of the investment.
  • When your trading system allows you to get two out of three trades right and you distribute your investment in 10-partitions, keeping one as cash, you could achieve exceptional results.

For our calculations, we always take a conservative approach, calculating with the lower rate of expectation and by not having a chance to control that you are complying to our trade rules, we cannot commit that you will achieve such exceptional results, but want to share the opportunity option trading can give to you.

The table below shows you, how we help you to distribute risk and how following our principles carries the potential to turn $3,000 into $18,070 in one month: Trades are based on a 4-hour chart.

Budget Planning for Option Trading NeverLossTradingStyle

The plan above keeps a security chest, in case of a bad streak during the investment cycle.

When you are trading NeverLossTrading style, you always have a clear business plan: financial plan and action plan (what to do when, where, and how) to follow high probability trade setups on multiple time frames for a big variety of assets.

To learn how this is done, we offer multiple mentorships and systems; take a look and let us know on which you want to receive a personal consultation hour…click. 

To let you know assets ready for a price move, we offer in addition our NeverLossTrading Alert services…click. 

For a live demonstration of your preferred system:

Call +1 866 455 4520 or contact@NeverLossTrading.com

If you are not already part of our free trading tips, reports, and webinars…sign up here.

Good trading,

http://NeverLossTrading.com

 

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April 9, 2016 at 1:38 pm Leave a comment

An Option Trading Tycoon Makes Money Opening to Noon

To continue our series of option trades, let us give you an example of how to take limited risk and beautiful reward trades.

The example given is an example from an NLT-student:

Today, I gave a day trading and trade preparation class and we did not come off shabby, making a 59% return between 9:45 a.m. ET to 9:52 a.m. ET; while talking, exchanging, watching Level II Option Screens and going through NeverLossTrading setups. We went short with Puts on WYNN. The NLT Stock Alerts showed a NLT Light Tower Candle on the high and we knew what this means:

With a Put, you can short the stock, even in an IRA – and this is what we did.

However, take a look at the following chart, which some of us put into action: NLT signals are only validated if the following candle surpasses the set price threshold, else we ignore them. The chart shows AAPL on a short-term trade with two wonderful trades between 9:45 a.m. ET and 11:59 a.m. ET:

  • One short: $525.46 to $523.26 (-$2.20)
  • One Long: $526.00 to $5.27.87 (+$1.87)

Trading options, the two trades together produced a 70% return, using the NLT Delta Force Concept (part of our mentorship).

AAPL NLT HF Day Trading Chart

Be an Option Trading Tycoon: Pay Yourself at Noon!

Learn this trade at the NLT HF Day Trading mentorship!

People at times tell us our Mentorship are expensive.

Our opinion: “They are not, most of the students make a two month payback” and if you want to start slow check  TradeColors.com and NeverLossTrading Alerts.

A $297-training, which most probably does not work is really expensive, it might cost you all your funds.

Be part of our free reports and webinars: http://neverlosstrading.com/Reports/FreeReports.html

Good trading,

contact@NeverLossTrading.com

February 25, 2014 at 2:22 pm Leave a comment

Pre-Market Mover Scan by NeverLossTrading

Daily our scanners skim through the pre-market session to put selected stocks on our plate to either day trade the underlying or day trade their options.

Today, February 24, NFLX came on the radar and alerts went out at 9:05 a.m. ET. 

 This is one of the shares, we like to day trade with options.

 At the 10:10 a.m. candle, the underlying gave us a buy signal and option execution was the name of the game.

 NFLX Call Option Trade

 

Imagine, you bought at $1.50 and you sold at $3.50

 

This turns your $1,500 invested into $3,500 in the matter of one hour.

 

Those strategies, the referring indicators, their trading plan and so much more; ready for you to learn and put into action: NeverLossTrading HF Day Trading

 

Check out the details or ask for a personal consulting hour:

 

Call +1 866 455 4520 or contact@NeverLossTrading.com

 

If you not yet ready for a new trading system, sign up for NeverLossTrading Alerts and know where the markets move.

 

February 24, 2014 at 2:09 pm Leave a comment

Weekly Option Trading Wisdom

 This publication is your money saver – and on top, it is free. 

Option trading is fantastic, when you know what you are doing – it is dangerous if you don’t.

Why? 

Multiple variables and instances define the price of an option and you can apply various option strategies to trade at specific price constellations of an underlying. 

The inspiration for this article came from reading a publication, where a trading educator proclaimed the ultimate wisdom to “Instant Options Income”. 

The referring trading strategy was a credit spread with weekly options and after eight days (the time used in the example), you keep the premium made. A high probability trade setup was found by some moving average crossings and underlined by the trading strategy, where you will be profitable if the share price goes up, slightly retraces or moves sideways. The trade had the following components: 

  • 10 Bull Put Spreads: You expect the price of the underlying to stay above a defined minimum price level to keep the premium received
  • Every contract controlled 100 shares
  • The obtainable premium received was $230
  • The spread of the option strike prices was $2.50

 In the shown example, the trade was made and the premium kept. It all sounded good; however, to evaluate this trading example, in respect to repeatability, let us consider the following: 

  • $30 average commission to open the trade and in case you have to close it, you again pay $30
  • The risk of the trade (Spread x Contracts): $2.50 x 10 x 100 = $2,500
  • Potential net-return of the trade (Premium – Commission): $230 – $30 = $200

For every trade, an odds approximation is essential: In this example, let us take 10 trades and out of those nine winners and one loser: What will be your trade balance?

  • The expected net return of $200, times nine positive trades = $1,800 (gain)
  • If you get caught once with a max loss = $2,500 + $30 = $2,530 (loss)
  • Even so you had nine out of ten positive trades, your trade balanced = -$730 (loss)

 In essence, the potential risk of the trade is not in balance with the potential reward.

To quantify the real probability of this trading strategy and what it probably will do to your trading account: Take the at-the-money Straddle plus Strangle premium, divide it by two, add and subtract this result to and from the actual stock price. This will give you the 1-Sigma price range, where the market maker expects the price of the underlying to end up being at expiration. When using a Gaussian distribution the 1-Sigma range contains the final price of the underlying at expiration with a 68% probability.  

Rounding the 1-Sigma range to 70% and relating seven winning trades and three losers, your trade balance after 10 trades might end up being: $1,400 – 3 x $2,530 = -$6,190 (loss).

This is how quickly a high probability weekly option trade setup can end up draining your trading account and with this article we want to help you to stay out of such trading strategies. 

Does that mean, weekly options are not good to trade? 

Absolutely not, they can be a perfect trading instrument, if you use limited risk and high upside reward strategies; however, you always need to consider that the weekly option deteriorates about 20% of its time value per day you hold it. 

In the NeverLossTrading mentorships, you will learn applicable trading strategies for Stocks, Options, Futures and Forex. 

Check our offering for details: http://neverlosstrading.com/Classes_Overview.html

Schedule a personal consulting our: Call +1 866 455 4520 or contact@NeverLossTrading.com

Good trading, 

Thomas

February 19, 2014 at 8:06 am Leave a comment


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