A Report By InvestingWithOptions
- Options Can Build Wealth Quickly. You get a ton of leverage and have the ability to control risk against moves.
Most Traders Lose Money Trading Options. This happens because people put on trades without understanding the risk in the trade or the advantages to alternative trades.
This leads to poor risk management and either a slow drain on a portfolio or a blow out from one trade gone bad.
- You Don't Need to Time The Market. Too many people use options as glorified leverage, but can't pick stocks well to begin with.
There's a way to make money using options without having to guess whether the market is going up or down.
- Directional Speculative Trading. These strategies use the leverage of the options markets to make super fast gains.
You need to be a great market timer and constantly monitor the market if you want to succeed.
- Directional Income Trading. Instead of making money on a fast move, you can make money if the stock simply doesn't go past a certain level.
This carries higher odds, but less reward relative to your risk.
- Non-Directional Income Trading. This set of trades are put on using systems instead of guessing where the market goes.
They are also the most complex trades you can take. If you can master the complexity of income trades, you'll have a new set of trade strategies
- Focus on Risk First. Deciding how much to trade is just as important as how much you can make.
- The One Fifth Rule. To reduce position risk and have smart management, you should look to put no more than 20% of your capital into a single trade.
- The Other One Fifth Rule. Your return on capital for income trades can range from 8-40% but you expectation should be a 20% return.
- The 20 on 20 Rule. The goal here is to earn 20% on 20% of your capital.
If you can do that you have a portfolio return of 4%.
- Consistency. If you can properly manage your income trades, a 30% yearly return is a practical target that is well within reach for even the novice trader.
- Be Bored. Income trading is not an exciting strategy. You won't be up all night staring at stock charts. You will treat it like a "boring" business that creates cash flow and builds wealth.
- Don't Get Blown Out. The biggest pitfall for income traders is the need to be right all the time.
If you can't accept a loss or manage your risk then you'll have to work twice as hard to regain your losses.
- Ignore Your Ego. Income trading is not about being a master market timer that calls tops and bottoms.
Focus instead on your system and the results will follow.
- Use the Greeks. These kinds of trades are complex, but if you focus on the total risk in your position, it becomes much easier to deal with.
Your free training shows how you can efficiently manage your trade.
- Manage your delta. The biggest risk in an income trade is having too much directional exposure on.
By adjusting your trade once your exposure becomes too high, you can stay in a trade long enough for the profits to come in.
- Check your gamma. Your directional exposure increases as the market moves away from your entry point, so you can "reinsure" your position by buying cheap options.
The Different Kinds of Option Strategies You Can Choose
What Kind of Results to Expect
How To Manage Income Trades So You Don't Blow Up Your Account
Is this All You Need to Know?
The knowledge you've learned can be put to work today, but you may need some more help.
InvestingWithOptions has developed resources to get you through the basics of Income Trading.
Our Income Trading Resource Pack includes:
- A 1 hour video going over income trading basics and how to decide on the best trades to take
- 5 Separate case studies of trades actually taken at investingwithoptions
- an income trading journal to make sure you track the right things for your success
- an income trade flowchart to help you make the best decisions in your trade
- our income trading blueprints so you can have crystal clear strategies and how to employ them sjp fix this