Realities of Full-Time Option Trading

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Stay tuned for Part 2 where we discuss how to easily and efficiently identify attractive weekly options trade candidates every day…. Weekly options provide traders with the flexibility to implement short-term trading strategies without paying the extra time value premium inherent in the more traditional monthly expiration options. Thus traders can now more cost-effectively trade one-day events such as earnings, investor presentations, and product introductions.

Flexibility is nice and all, but you are probably asking yourself, what specific strategies should I use to generate weekly profits from weekly options? Looking to generate some extra premium income in your portfolio? Well look no further, I have the strategy for you: Weekly Options Covered Calls. In essence, what you are looking to do in this strategy to is to sell weekly call options against existing stock holdings covered calls or purchase shares and simultaneously sell weekly call options against the new stock holding buy-write.

The weekly expiration of the sold call options allow you to collect additional income on your position, similar to a dividend but paying out each week. Over time the covered call strategy has outperformed simple buy-and-hold strategies, providing greater returns with two-thirds the volatility. Because of the exponentially high time decay in weekly options, most traders prefer to sell weekly options and understandably so. In the covered call strategy highlighted above traders are able to collect the rapid time decay by selling the weekly calls against a long stock position.

Selling naked puts, in theory put-call parity is equivalent to a buy-write strategy though skew and margin requirements alter the picture a bit. This is a phenomenal way to take advantage of option leverage and limit decay. Credit spreads are popular because they allow traders to sell upside call spreads or downside put spreads levels with a locked-in risk-reward from the trade outset.

Unfortunately without the underlying stock, this weekly call option sale would require a substantial amount of margin within your portfolio, as the maximum potential loss on the trade is theoretically infinite. However, you can reduce the max potential loss and margin requirement by simply purchasing a higher strike call i. Weekly Options Calendar Spreads: Remember that a calendar spread is a two-legged spread constructed by selling a shorter dated option and buying a longer dated option.

The profit engine is the relatively faster decay of time premium in the shorter dated option. Calendar spreads reliably achieve their maximum profitability at the expiration Friday afternoon of the short leg when price of the underlying is at the strike price. Prior to the recent availability of these weekly options, calendar spreads were typically constructed with around 30 days to expiration in the short leg.

Hit and run calendars differ in risk somewhat. Volatility moves rarely occur at anywhere close to the rapid pace of price movement. Because of this characteristic, the primary risk in these short duration calendars is price of the underlying.

The occasional occurrence of spiked volatility in the short option significantly increases the probability of profitability as the elevated volatility decays to zero at expiration.

One of the very liquid underlyings that has actively traded options is AMZN. A quick look at the options board showed the weekly strike option, having 4 days of life left and consisting entirely of time extrinsic premium, was trading at a volatility of This situation is called a positive volatility skew and increases the probability of a successful trade. I continued to monitor the price, knowing that movement beyond the bounds of my range of profitability would necessitate action.

By mid day on August 31, 48 hours into the trade, the upper limit of profitability was being approached as shown below:. Because price action remained strong and the upper breakeven point was threatened, I chose to add an additional calendar spread to form a double calendar.

This action required commitment of additional capital and resulted in raising the upper BE point from to a little over as shown below. Hit and run calendars must be aggressively managed; there is no time to recover from unexpected price movement. Shortly after adding the additional calendar spread, AMZN retraced some of its recent run up and neither BE point of the calendar was threatened.

I closed the trade late Friday afternoon. The indication to exit the trade was the erosion of the time premium of the options I was short to minimal levels. The results of the trade were a return of If the second calendar had not been needed to control risk, the returns would have been best strategies for option trading higher.

This is just one example of the use of options in a structured position to control capital risk and return significant profit with minimal position management. Such opportunities routinely exist for the knowledgeable options trader.

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You can be an average person and learn how to make a living by trading options. Chuck Hughes is the perfect options trading expert to learn from. Thirty years ago he was just an airline pilot who became interested in the options trading market. What started out as a hobby quickly turned into his main source of income.

He started investing daily options for income and soon after quit his job as an airline pilot. From that point on he relied upon trading options for a living.

Thirty years and 8 international options trading championships later, Chuck Hughes has devoted himself to provide options trading strategy to novice options traders in order that they might learn how to make a living by trading options for income. Trading options as a business does not happen overnight. Options trading is a learned skill. The options trading market can be very intimidating to someone just starting out. It can seem difficult to put together a winning strategy when there are so many different strategies to choose from.

It is easy to get lost in the market and come out discouraged. Investing in an options trading mentor can be the difference between making and breaking your career in options trading. Chuck Hughes has 30 years of experience as someone who trades options for a living. Not only is he successful as an options trader, he has experience in providing options trading advice.

Call Chuck today at or become a member of Chuck Hughes Options Advisory Service today to start trading options for income. Anyone can learn how to create an income by trading options. The sooner you start trading options the greater chance you have of making money as an options trader. Start investing in options trading as a hobby. Then allow it to become something more as you become more comfortable in the options trading market. Trading options for income is an exciting and obtainable goal.

But you have to be smart about it. Here at Chuck Hughes we value your investment in the options trading market. We work hard to provide you with only proven strategies in order that you might increase your profit and lower your risk for loss. Trading weekly options for income is possible because of how lucrative the market can be when you use strategy. You can start trading with just a small amount of money by leveraging your cash. By using the concept of leverage, a large amount of capital can be controlled with only a small amount of money.

However, your potential return on investment ROI is dependent upon how much money you are willing to put into the market. When trading options for income it is important to learn when to be ambitious and when to be patient.

Having the ability to understand the appropriate time to make a trade and when to hold off from trading is critical. Having this understanding comes out of creating strong options trading strategies. This is why using an options trading agency is extremely valuable. Chuck Hughes utilizes many formulas to help his clients profit from a volatile market. His trading formula includes buying call and put options, bullish and bearish option spreads, covered calls, option cycle trades and bullish and bearish exchange traded fund ETF trades.

The MVP allows him and his clients to:. Chuck uses these strategies to provide multiple weekly opportunities for his clients to participate in trading options in various different markets.

This may increase the ability of his clients to create a living. Using Chuck Hughes as your options trading strategist can increase your probability of success in trading options. Because of his experience and due to his successful weekly options income strategy, he will be able to provide you with options income strategies that may provide you with monthly cash flow.

If they are not successful in trading options professionally, they certainly are not worth your time as your options trading agency. His most recent options trading results are shown below. This tactic has allowed Chuck to protect his investment while trading options for income and lower his risk of loss. What is the difference? An open trade simply means that the asset is still owned by the investor and included in his portfolio.

It has yet to be traded. Once the investor sells their respective asset, their trade becomes closed. When a trade is open, a person does not actually know how much profit will or can be made from the transaction.

When a trade is closed, a person can view an entire transaction, from the purchase point to the selling point. A closed trade is more representative of the profit or loss that was accrued from the trade simply because the trading process has finished.

You can learn a lot about an options trader by looking at their past options trading records. He has built a successful career by trading options for income. Now is the perfect time to start trading options, so that soon you might be able to trade options for a living. The options trading market has exploded in recent years due to its limitless opportunity for growth.

Using Chuck Hughes as your options trading agency, your chance for profit can be increased and your risk of loss decreased when you start to sell weekly options for income. It's not how much money you start with Trading Options For a Living: Anyone can learn how to trade options for a living. Anyone can earn income by trading options, just remember that: Trading options for a living takes time.

It is a learned skill. Chuck Hughes can help! Trading Options as a Business Is Possible with Chuck Hughes When trading options for income it is important to learn when to be ambitious and when to be patient. The MVP allows him and his clients to: Start Trading Options for Income Now is the perfect time to start trading options, so that soon you might be able to trade options for a living.