How To Succeed in Trading Options

what's up everyone this is Adam Thomas here with sky view trading comm and in this video I'm going to show you a little bit about how I trade I'm going to show you how you can be wrong about the direction of a stock and still make money what you're looking at right now are my current positions you can see I've made one thousand six hundred and sixty nine dollars today and if you look at my theta numbers you will see that they are all positive theta is a measure of time decay so this means time decay is in my favor and I'm bringing that money into my account each day this is where consistency comes from when you can make money even when you're wrong about the direction of a stock that's where the real money is made so a question I get a lot is well don't I need a big account to do this and the answer is a definite no the only requirement to trade these strategies is that you have a margin account and at most brokerage firms they only require a minimum balance of about two thousand dollars for this type of account and if you currently don't have a margin account don't worry I have a video showing you how to upgrade to margin and you can see this says I'm tying up about seven thousand dollars but the real number is actually about twenty thousand it's just thrown off by this long EE in stock that I have but yeah so I'm tying up about twenty thousand dollars with these current positions but you can see most of these positions I have on are five and ten contracts so the smaller the account that just simply means you are going to be trading smaller size and maybe adjusting your strike selection but we'll get into that later and that's actually a big misconception about selling premium people think you need a big account to do it and that it's risky well I'm going to show you how it's actually less risky than any other option strategy you can choose your risk you can choose your probability of success you are limitless with these strategies so let's dive in and take a look at our first lesson let me ask you a question have you ever entered an option trade where you are right about the direction of the stock but you still lost money because of time decay now if you've been buying options and I'm pretty sure the answer is yes a lot of you traders may not like to hear this but I'm here to tell you that short term market moves are completely random whether a stock goes up or down is a 50/50 chance coin flip I can already hear someone getting mad and saying that I don't know what I'm talking about because they know a guy who makes tons of money buying or scalping options but listen I don't care if you're Warren Buffett or if you're Jimmy Buffett you don't know if the stock is going to go up down sideways or in circles and this is exactly why 90% of traders lose money they focused way to much on predicting future stock prices and focus way too little on using the correct strategies and look if you still feel like you can consistently predict the market you know that's fine and everything but you still need to learn what I'm about to teach you so you can make money even when you're wrong and therefore maximize your gains and minimize your losses and remember option prices are affected by three elements of the underlying stock price of the underlying time to expiration and volatility time value of an option is decreasing 100% of the time every day every hour volatility is priced into an option when volatility of an underlying is high options are expensive and when volatility is low options are cheap volatility is extremely predictable and there's proof of this in my other videos this is the backbone of my trading strategy price of the underlying stock is the only element that you don't have a clue what it will do so why do 90 percent of traders only focus on price of the underlying and ignore time decay and volatility when trying to make money in the markets instead traders should first be focusing on the only thing you can be 100% certain about time decay with the right knowledge you create your odds of success in trading let's say you're playing poker you were dealt an ace of hearts and a seven of hearts and there are two other hearts on the table with one card left to come out if it suit is also at heart you will have a flush and you will win this hand now the probability of the next card being a heart is 25% so let's say the pot is 100 dollars and you either have to call $20 or fold so what do you do of course you call the $20 because you're risking one to make five and your odds of winning are one to four now let's change the scenario let's say the pot is still 100 dollars but this time you either have to call $40 or fold what do you do well now you fold because you're risking one to only make two and a half but your odds of winning are only one and four now it isn't important whether the next card is a heart or another suit because we have no clue what it will be what does matter is that if we put the pot odds in our favor we will certainly make money over time because the numbers always play out and just to note I only play poker for fun with family and friends not ever hand is as straightforward as this one so it's much less efficient than trading but just like the smart poker player did not attempt to predict the next card the smart traders do not try to predict the next stock move smart traders understand that guessing market Direction is not a trading strategy you should be placing trades where you're in a position to profit even when you're wrong about the direction and this is the problem too many traders are focused on predicting the next card which is impossible okay so if the market is random then how do we consistently profit one we put time decay in our favor two we put the probabilities in our favor and these two sort of go hand in hand and last but certainly not least we take advantage of our volatility edge this volatility edge is our pot odds just like in the poker example in the option pricing formula there is a key detail and how volatility is priced into options that gives us a huge edge if you know how to take advantage of it this is talked about more and the video lesson library under the video titled finding your edge within black Scholes I'm going to teach you everything you need to know to become a consistently profitable trader where you're taking money out of the markets and into your account every single month and here are a few of the key concepts you're going to learn about and remember it's not everything as I have over four hours of video lesson library content you're going to learn the correct strategies to use you're going to learn when to use them based on what implied volatility is telling us correct position sizing based on your account size you're going to learn when to take prophets and how and when to defend losing trades you're also going to learn about the relationship between probability of success and return on capital every single one of these concepts is proven and shown to you in video format and listen any and everything that I teach has been proven through back testing I don't just tell you something like hey the market is random without actually doing real research to prove it it's not some speculation or me saying hey this chart pattern works just because it does no that's not how you make money in the markets and there are way too many people out there teaching concepts like that that aren't proven and they're completely wrong when you sign up for my mentoring program here's what you'll receive every single order that goes through my account is immediately texted to your phone this includes opening trades closing trades and adjustments regular emails highlighting my outlook on the market current opportunities and my game plan going forward access to the video lesson library with videos for every skill level trader whether you're a brand new trader or you've been trading for years there's invaluable content in here that will revolutionize the way you trade various videos for members including live trading and more and so you don't lose track of the text alerts a screenshot of my current positions will be posted online each day for you to see and last but certainly not least I'll offer one-on-one coaching so I can answer all of your questions so take action and sign up today I look forward to meeting you and working with you and I will see you on the other side ah

Channel: Sky View Trading

Views: 469,100

Rating: 4.3429952 out of 5

Keywords: how to trade options, how to become a consistently profitable options trader, how to make money trading options, how to trade options for beginners, options trading, options trading for beginners, options trading 101, options trading explained, options 101, options trading strategies

Id: vcQQlyxGVzk

Length: 8min 22sec (502 seconds)

Published: Mon Sep 14 2015