This video continues to discuss the risks from short option selling only, why I can’t view this as a viable trading method. Yes, we use short options strategies all the time, but only because they are combined with directional price continuation trades for protecting them.
This video discusses a short facebook call that recently went deep in the money and was at a 2.39 loss – and facebook has gone up around 2 more points since then. However, because of our short options protection strategies, this call is actually part of a profitable position.
An options credit spread combination put leg goes into the money on a large gap down – how does the risk-reward change, and what adjustments can be made through trading. The video also discusses some ‘base’ method setups for underlying trading – and whether they were also done as option trades.
Selling cheap uncovered short options strangles that are multiple strikes out of the money may seem like an easy way to make money, because of the supposed likelihood of the trade expiring worthless. But it is a trade with terrible risk reward and may be a lot riskier than would appear from the short strikes location.
Risk reward evaluation and options trading math can be used for locking option trade profits, where you are protecting your existing profits and giveback, while allowing for increased trade potential.
You may think of our trading strategy setups for entering or exiting trades. But they may be used for making option spreads adjustments to the individual legs, which can then increase overall profits, when compared to holding the spread intact until expiration.
Short options trading for credits are a big part of our trading strategies. However, it is important to use resistance and support rejects for entry timing, so that risk can be reduced and the credits can be increased or the prices of a spread can be improved.
Options trading video discussing short options and spread positions adjustments, by using directional trade and entry timing setups to buy long options or exiting the shorts.
When you leg into or out of an option spread, you do your trade 1 strike at at time instead of as a spread. Timing this ‘properly’ can give a number of trading profit benefits – including making more money on the spread than its maximum at expiration, and doing credit spreads that can’t lose money.
This video discusses legging into and out of option spreads, and reviews a timing problem with a spread legged exit. A 4.00 spread price hit the trader’s trailing price of 3.00 on a gap [and I am all for that decision], but instead of exiting the spread at one time, they tried to leg out and only ended up with 1.80.
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