option trading secrets

8/2/2019 Option Trading Secrets

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Option Trading Secrets

A quality of vital importance for

sophisticated investors


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Preparing to play


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Preparingthe will to win is important, but the will to prepare is vital Joe Paterno

Options trading and stock trading, which trades are more dangerousgame?

Education, education, education

Play it on paper

Do your home work


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The prediction game


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Secret prediction methods

It is impossible to forecast the future or stockprice

However there are some methods that willimprove your ability to predict the futures;

workable crystal ball Using technical analysis Using psychological moment analysis Regression back to the mean

Remember Murphys law If the possibility exists of several things going wrong, the onethat will go wrong is the one that will do the most damage

Phc bt trng lai, Ha V n ch


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Vix CBOE Chart


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Tracking the chartsVery powerful tool


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Use the law of supply and demandOption is a heavy leveraging tool


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The options buyers secret weaponShock and Awe

Murphys law again When youre buying option the only thing you bet against is Surprise Volatility

The Bell curve theory V.S The Chaos Theory

Stock is the only instrument offering the greatest potential for surprise movements


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The secret advantages of optionwriting

You can enter the trades where you havea very high probability of winning nomatter what the market does

You are able to have quick profits all thetime

Two factors you must pay attention to:

Time Distance

Remember : get out of the hot seat!


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Strategic Defense36thstratagem If everything else fails, Retreat

Sun Tzu, The art of War

Use stop loss

Cover the options when they lose most of the value

Never be afraid to take a loss

Exit when you feel uncomfortable

Exit when the underlying scenario or the trend changes


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Naked put Writing can create a win-win StrategyThe 12th Stratagem Take the opportunity to pilfer a goat

You want to make money?

You want to buy at the low?

You want to own the fundamental stocks? You want to catch the falling knife?


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Option Analysis

Here are the factors when entering the trades What is the fair value of the option? Make sure you

buy undervalued and sell overvalued. True cost of

hedging is the true value What is the probability of profit if you hold the positionuntil expiration?

What is the probability of hitting loss or profit goal

during the life? What is the delta?


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Option analysis


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Spread advantagesThe seventh stratagem create something from nothing

A spread is best defined as a combination of buying selling two or moreoptions at the same time usually on the same underlying asset

The most difficult part of spreading is learning to design a spread andunderstanding the risk-reward picture for the spread.


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Avoid repair strategies

When you design the spread Avoid repair strategies

Avoid delta neutral strategies


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The top secret war room

Tell No one what you are doing, if not you are putting pressure on yourself

not to take a loss WHEN YOU SHOULD


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Dont try to catch on the fallingknife

Dont write a put in the face of a major downtrend


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The ultimate power playThe secret surrogate

One of the most powerful strategies isused to create a powerful payoff picture

Long term option debit spread

The power of Time

The power of Knowing the unknowns

The temptation of being right The excellence of Leverage A powerful weapon in your arsenal


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A gold surrogate


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A Chaotic Scenario

Buy 1 year gold call option at 2000 costs105$

Sell 1 year gold call option at 2400 gains50$

If gold moves beyond 2400 within 12months, how much $ you earn for oneounce? 400$ over 55$ cost, or over 700%return a year

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