Recently, I had an important chat with a stock-option manager who is still seeking for the mysterious formula to yielding dependable returns with option investing each month. He mentioned some things which were so obvious to me and brought up many past memories.
One thing that stood out was when he said "Non-directional option trading doesn't mean we can make money in any direction. It means that we make money if the underlying doesn't move in any direction. In other words, it's still a directional trade, sideways." This is correct, and most people advertise that it's easy to make money with options because we can make money on any direction. This is true in some respects and not true in others.
Those investing with Condors understand what I am saying, especially if you are investing in the Iron Condors which most programs and written materials preach. If you are investing with this option strategy during 2008 and 2009, you most likely aren't doing much good. The reason for this is that the Iron Condor is just as directional as other option positions only that its direction is called "Sideways." For most traders, it's just as difficult to forecast a neutral move as it is to predict an upward move or downward one.
So many option traders have called me recently to tell me the same thing. "I was doing great with Condors and Credit spreads for a few months, but then last month I lost nearly my whole trading account." This is so common amongst option traders in today's market.
This is precisely why I don't preach the normal style of Iron Condors. If you are a couple days from expiration, and the RUT is right up against the sold contract, subsequently you are investing in the same manner as the average investor does. I'm speaking of the one who has very little investor education, and because of this, shortly you'll be telling your buddies a similar story. However, it's a very different story that you'll be telling your wife! You smile today at this, but you won't be showing your pearly whites during a time when it happens in your own trading. Another serious problem with this aggressive style of investing is that the anxiety level can be so elevated that it really destroys your well-being on a daily basis. Many of you reading this know what I am talking about.
Well, we've addressed this aggressive trading style at San Jose Options Mentoring. We've redesigned Condors and Credit Spreads. Our technique gives the underlying more room for the price fluctuation, giving us breathing room in our trading as well as in our lives. We find the less adjustments we have to make, then the more we bring home at the end of the month.
Besides teaching a safer way to trade Condors, we've also developed techniques to lock-in our profits on them. Most option traders exit their trades when they make a profit, but we can lock-in our profits and stay in the trade.
Also, when we do have a trade go against us, well, we have ways to get a free trade from it. This is another important technique that we teach to our students. While many traders exit with a loss or never exit and sustain a huge loss, we exit and get a free bonus trade that can always lead to returns at a later date.
So there you have it! Whether it's a winning trade or a loser, we have really developed some nice trading tactics that can improve your personal trading immensely. - 23210
One thing that stood out was when he said "Non-directional option trading doesn't mean we can make money in any direction. It means that we make money if the underlying doesn't move in any direction. In other words, it's still a directional trade, sideways." This is correct, and most people advertise that it's easy to make money with options because we can make money on any direction. This is true in some respects and not true in others.
Those investing with Condors understand what I am saying, especially if you are investing in the Iron Condors which most programs and written materials preach. If you are investing with this option strategy during 2008 and 2009, you most likely aren't doing much good. The reason for this is that the Iron Condor is just as directional as other option positions only that its direction is called "Sideways." For most traders, it's just as difficult to forecast a neutral move as it is to predict an upward move or downward one.
So many option traders have called me recently to tell me the same thing. "I was doing great with Condors and Credit spreads for a few months, but then last month I lost nearly my whole trading account." This is so common amongst option traders in today's market.
This is precisely why I don't preach the normal style of Iron Condors. If you are a couple days from expiration, and the RUT is right up against the sold contract, subsequently you are investing in the same manner as the average investor does. I'm speaking of the one who has very little investor education, and because of this, shortly you'll be telling your buddies a similar story. However, it's a very different story that you'll be telling your wife! You smile today at this, but you won't be showing your pearly whites during a time when it happens in your own trading. Another serious problem with this aggressive style of investing is that the anxiety level can be so elevated that it really destroys your well-being on a daily basis. Many of you reading this know what I am talking about.
Well, we've addressed this aggressive trading style at San Jose Options Mentoring. We've redesigned Condors and Credit Spreads. Our technique gives the underlying more room for the price fluctuation, giving us breathing room in our trading as well as in our lives. We find the less adjustments we have to make, then the more we bring home at the end of the month.
Besides teaching a safer way to trade Condors, we've also developed techniques to lock-in our profits on them. Most option traders exit their trades when they make a profit, but we can lock-in our profits and stay in the trade.
Also, when we do have a trade go against us, well, we have ways to get a free trade from it. This is another important technique that we teach to our students. While many traders exit with a loss or never exit and sustain a huge loss, we exit and get a free bonus trade that can always lead to returns at a later date.
So there you have it! Whether it's a winning trade or a loser, we have really developed some nice trading tactics that can improve your personal trading immensely. - 23210
About the Author:
Are you ready to become an elite option trader? Improve your Option Trading now by visiting San Jose Options Mentoring online at www.sjoptions.com. Visit today and get a Free Video on Option Greeks, a $200 value absolutely free!
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