Make A Living Trading This ONE Option Strategy (For Beginners)
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- เผยแพร่เมื่อ 1 มี.ค. 2024
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1) The Options Income Blueprint: optionswithdavis.com/blueprint/
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If there was just ONE Option Strategy you could use to make a living from trading the markets, which strategy should you use?
It should be a strategy that is safe, simple to execute, and has an edge over the long-term.
Which Option Strategy is this?
I reveal this powerful strategy in this video...
Other videos you might be interested in...
1) Generating Income With Credit Spreads: • Credit Spreads
2) Consistent Income With The Iron Condor:
• Iron Condor
3) Recurring Profits With The Wheel Strategy: • The "Income Grid" Whee...
#optiontradingforbeginners #optiontradingstrategies #optionsellingstrategy
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1) The Options Income Blueprint: optionswithdavis.com/blueprint/
2) The Credit Spreads Blueprint: optionswithdavis.com/cs-blueprint/
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Davis, I went back to my notes from your earlier videos, and you had guidance that the net credit you want to receive from a Bull Put Spread is from 30-40% of the width, so for a $5-wide that would be $1.50-$2.00. I looked at a 46 DTE SPY Bull Put Spread the other day, and for the short strike right at the .25 delta and 5-wide, the net credit was only 77 cents. Is that too low? Or is this strategy here a simpler variant that is okay to have a credit of less than the "usual" guidance?
Superb video! Great coach!
Thanks for the Saturday morning session. I appreciate it, as well as the topic.
You're welcome 👍
Hi Davis, in either setup, would you close the position prior to 21 DTE if it hits 50% profit? Both of these are slightly different from what you had shown in the past with respect to position management, ie close at 50% profit, at 21 DTE, see if short strike is breached, etc.
Thanks for sharing this strategy! I sell covered put options most of the time, but I definitely want to try this one now. Thanks again, Davis!
You're welcome 👍
Thank you for another great video! I don’t qualify yet for tier 2 credit spreads at Fidelity only tier 1. Hence I will only be selling CSP’s. My question is 1) do you still think it is a good conservative strategy to buy a protective put with say 10% of the premium, 2) Is 45 DTE still the best time frame in that case or could you go shorter like weekly to earn more premium?
great course, thanks u so much for sharing Davis!
No problem 👍
Hi Davis, is it advisable to choose a long DTE say 1000 days, and close it say in 7 days once it is is in a profit zone? Reason for chooing higher DTE is so that the premium earn is higher.
Such a solid strategy. Thank you Davis 👍🏻
You're welcome 👍
Excellent video, Davis. Super clear instructions.
Thanks for the kind words ☺️
Thank you for these awesome videos.. They are easy to understand . You make it so easy & simple.
You're welcome.
Dude, you give the most solid advice for folks who just want to make some money with least risk. Excellent, as are all your videos!!
Thanks for the kind words, appreciate it ☺️
@@optionswithdavis joined your group. Least I could do for your avuncular advice..
Appreciate it, Stan ☺️☺️
@@stanmanmedia I don’t see where you can join this group… Are you talking about just joining the TH-cam channel for the additional 4.99?
Great realist info as usual….thanks for sharing good strategies
You're welcome 👍
Hi Davies, have been following you and your content for almost 9 mths. Great info. Just a suggestion for making a living. May be good to illustrate base on 45 DTE, how can 1 make a living, ie. based on mthly expenses of USD$5000? Assuming closing at 21 DTE. with 1 contract of SPY, at 20 delta shd be ard USD$150 max? I recall that u dont recommend selling more contract to match the risk level 1 will willing to take, but rather increasing the "width" of the credit spread. How then does 1 achieve 5k a mth to trade for a living?
Thanks for your support and the suggestion 👍 Will consider planning a video on this.
2nd Question: Do you think it's okay to have two of these SPY bull put spreads on at the same time, entered about 10 days apart? Or is just one at a time better, under your "Rinse & repeat" principle?
Nice video. For Method #2, do you observe the RSI for the selected stock on its daily chart? Thanks.
Thanks ☺️ Just the stochastic oscillator. You can see the settings here: th-cam.com/video/wubStqtr27o/w-d-xo.htmlsi=NUW_UJxin72VX6nw
You do a great job summarizing Tasty research. Please do a video on their recent 0DTE research.
Thanks ☺️ And thanks for the suggestion.
Excellent video my friend, very clear, good pace and good use of data.
i like to put on 2 trades same week.. CCS and PCS on same security
Davis, for the 45 DTE trades for ETFs, is there any particular day of the week that is more favorable than other for your entries? Do you favor entering in the mornings or afternoons, or does it even matter for that long an expiration?
It doesn't matter for me.
@@optionswithdavis
You answer his second question, but avoid answering the first post....
Hi thanks for your greats videos, so useful 🙏I m trading options on IWM, and I have the cash if I am assigned, does this strategy work the same if I m selling cash secured puts without buying a long put, have a great day
Yes it does.
Thanks Davis. How do you build the .25-.35 delta on Robinhood? There are selections for $ width, and % change, but don't see the option for delta.
Options chains usually show a column for delta.
Great information!!
Thanks!
How do you get a win rate of 90% win rate from a 35/25 delta option spread? Even allowing for the net premium received, the win rate on this spread should be less than 70%.
What about the delta to buy the option. You talked about the delta for Selling the option
Mentioned here: th-cam.com/video/81t8AoPOKCA/w-d-xo.htmlsi=I4NgupYvRCy5wOFG
Davis, I know that with a simple single option buy or sell, the delta tells you the % chance of a win/loss. How do you compute that for a credit spread ?
The simplest way is to see the P&L graph. Also watch this: th-cam.com/video/81t8AoPOKCA/w-d-xo.htmlsi=83OYQqmMFjw1MU9h
Wrt the "25-35 delta" does this mean the delta is related to only the delta of the Put to sell, or is the "25-35" delta related to the sum of the Sold and Bought puts? Appreciate your help for me in advance for helping me understand this!
He answered this in the video. It’s the option you sell.
All this regardless of IV Percentile and IV Rank? Im surprised because in most strategies volatility is the main focus when it comes to selling Credit Spreads.
Davis, does the same criteria mentioned applies also for Bear call spread?
I have the same exact question, since we may be looking for some correction soon.....
I believe it would probably apply if we are in a bear market and the underline is trading below the 200 MA. We are in a bull market at the moment, thank God.
Yes same strategy but in reverse.
So, if you are selling the 25 delta for the put, how much lower is the put that you are buying? Is it just 1 strike lower? So, if you are selling the 498 put on SPY, are you buying the 497 put on SPY?
hello, I believe Davis was talking about a $10 spread. That would be short 498 put, long 488 put.
The spread for something like this would "typically" be $5 or $10. But you can modify this spread width based on how much credit you are trying to receive and how much max possible loss you are willing to risk to achieve that credit.
You can construct it based on this: th-cam.com/video/81t8AoPOKCA/w-d-xo.htmlsi=t8DtTub8CRZCo8Ej
A put credit spread strategy requires sell a put option AND buy a put option at a lower strike price with the same expiration date. The strategy you mentioned is just writing a put option isn't it? I just want to make sure I got your strategy correct as you didn't cover buying a put option in this video. Thanks
This is my question as well. I wasn't sure if he suggested buying the put 1 strike price below the sell put price?
the spread is $10 wide . its on the video
What is the movie average in your chart? Are you making any trading decision with moving average?
Hey Davis, which one of these strategies are YOU using on a regular basis?
Both.
In 25 35 delta, which will be short and long puts at?
The 25-35 delta put is the short put. The long put would be 5 - 10 points lower depending on how much you want as your max risk.
@@orlandofl6297 so in the entire video he never mentioned the exact strategy???
Already mentioned in this video: th-cam.com/video/81t8AoPOKCA/w-d-xo.htmlsi=2iSMSPd84I1NQWLU
Credit spreads are a very hard way to make money on the long run. You can easily be wiped out and there is little you can do to fix it. The easiest, best way to start is to use naked options on safe (well known) stocks. You can turn your position into a credit spread later to reduce risks, but you should start as a naked option.
I hear that Naked Options are incredibly risky. I prefer Scalping myself. Look for the absolute best highest probability setups and then Get In and Get Out.
Wide credit spreads act like naked options but with the benefit of margin reduction and defined loss. Also, it is possible to manage credit spread by rolling or hedging.
don't the 25-35 delta strikes give it a 65%-75% PoP? that is what I'm seeing on tasty. That is equivalent to 80-90% win rate? do you have the source video for that tasty study?
Even when your short leg go slightly in the money you still make money because of premium you get when you sell the put. Meaning the probability you make money is more than the probability delta indicates
@@coryjiang2909 that is accounted for in PoP provided by tasty. Maybe look at P50 as closer to win rate when closing at 21 DTE?
@@coryjiang2909 PoP includes that. Maybe we should be using P50 (probability of 50% profit) as a guide to win rate when closing at 21 DTE?
How do you manage black swan event ?
Rollover before your options go in the money
Who cares? You have defined risk. SPY or whatever can do to zero and you have no additional risk.
XSP can't be assigned early for anyone interested. Works like spy otherwise. It's cash settled.
That's right. If interested in cash-settled index options, I've already created a video on it here: th-cam.com/video/hHK8TdVnjTQ/w-d-xo.htmlsi=vQo8uG1PfsnG33hc
For beginners? Don't you need about $10k to start trading spreads? Also, isn't it very unlikely that a broker would allow a beginner to open an account to trade credit spreads?
Why not trade the Spx instead of spy?
SPX put spreads are defined risk just like SPY. In fact in some ways, SPX is safer given no risk of early assignment - cash settled also means no risk of being stuck with shares at a strike price that is far away.
@@xyexz That is truth I rather do spx spread
Have created a video on Cash-settled Index Options here: th-cam.com/video/hHK8TdVnjTQ/w-d-xo.htmlsi=Ss58WQsDXVUEPEcn
Win rate is meaningless and misleading. If you win 9 out of 10 trades but the losing trade loses 10 times more than the winners, you're not making much of a living.
That is why risk management is so important. You never want to take a maximum loss.
That was my problem.
Over time I just broke even.
When it comes to crypto that is way too volatile, one loss can indeed be more than wins on 9 trades. Stop loss must be used to avoid this or the one should DCA themselves out of the problem.
@@lapena7904indeed.. but sometimes max loss gets in your face overnight
Let me ask you something about this. You are making a comparison to the SP last decade. Last decade, we had almost 0% rate, under 2% inflation and FEDs around the globe are putting trillions in to the marked, and you have the covid exhaustion in this. Off course SP goes up with that streak, in fact you would be as save with a naked call. We are not there anymore, now we are maxed on rates, we have an index that had a couple red days since October, FED is not fuling markeds. It is a different marked. You can’t say, this happened in this period, because of that it will happen again, that is most likely not the case. This is misleading info you give here.