My BEST Option Trading Strategy Revealed!

the truth is options trading is super confusing and this can lead traders to losing tons of money so in this video I want to turn that around and simplify options trading as much as I can and hopefully give you the edge to make better profitable trades this video should change your life forever stay tuned so as you know I started out option trading 5 years ago and in that time I lost tons of money blew up tons of accounts I recently put out a video where I lost $15,000 trading options but during this time of five years trading options I realized it wasn't as complex as I thought it was you don't have to trade strangles and straddles and option spreads to make money it's just this simplified concept that I'm going to teach you in this video if you understand this you understand options and you understand how to make money from it so that's all I'm trying to do in this video and I won't waste your time the one thing I ask is that you subscribe to this channel because I'm putting out blazing-hot content every single week to make you a better trader so thank you for that and let's get into the concept and I will be using Robin Hood to show you it here we are throbbin hood I'm going to teach you this concept it's so simple to take less than 30 seconds once you learn it you can leave the video or you can stay till the end as I dive in depth telling me how to make money from it and how to actually apply it to your trading so here you are with Amazon options these are ones I'm currently trading this week actually and these options are calls expiring in four days from now as you can see the price of the option is $23 you multiply that by hundred to know the actual price you're paying so an amazon option cost a trader two thousand three hundred and twenty dollars that's how much we're paying and again you multiply this number by a hundred and that's how much is this actually cost you a hop chené traders out there very expensive options very hard to get into this stuff but I will say this is the one thing that took me so long to learn is the price of this option which we're gonna call 23 right now we'll call it 23 if we multiply this by 2 that is the implied move of an in four days this is the most important piece of evidence for option traders everywhere around the world this could change your trading forever and later in the video I'm going to tell you why and how and how you can profit from this knowledge but just so you know we multiply this by two is because we're pricing in the put options so Amazon can move up or down this certain amount and again we're gonna price in this option here so these two options together are gonna equal a $48 option and that is a 48 point move priced into Amazon so what we can expect from Amazon is it can move up 48 points so we're gonna end up at 1180 $5 or we can move down 48 points and we'll be at two thousand and ninety dollars so 90 95 90 ish so that is the implied move this week this is how it affects you options traders because if you don't get the move that large and you're buying something long you're gonna get hurt if we do get him move larger than this you're gonna make a lot of money and if we get the move sooner you're gonna make money as well so let me do this one more time with a different option so again all I'm doing is just predicting the move that is gonna happen with a certain option and what I'm going to do this time is the s py how much is the index gonna move maybe Wednesday so that's only two days away all you have to do again is add up the call and the put and that's the premium price that it's trading at currently this is why it works and I'm gonna tell you really quickly so traders they all are gauging how much a stock is gonna move they all are predicting there's millions of traders out there so if millions of traders are buying options then they are predicting the actual move and because there's so many people actually doing it it's very very accurate so because of that we just know that these options are great predictors of what's gonna happen in the market before it actually does so here's the s py right now we have a hundred dollar option for a call and I'll go down to the put and we also have a around $100 option so in general that is a $200 cost and that means we're gonna move two points in the S py in the next two days and again today just for example we moved about four points in the S P Y or R to two to four points depending on where we opened but two points is not unreasonable two points is very possible in the next two days for sure so this is not out of the realm of impossible we could definitely see this happening and this is all you have to do all we have to do is hit 337 and that's the predicted move on Wednesday or we drop down to 332 that's the predicted down move and again we're just pricing and using these options so the call and the put premium now we're gonna transition on how do you use this knowledge to make money now that we know the predicted moves how can we use this become better traders and stop losing money in the market so I'm going to show you an example right here is T and this is something we're trading with my option premium group so this chart may be really confusing to look at but basically T is expected or I expect it in the next couple months to touch 43 dollars which is a massive move that is gonna be a five to six point move from here five to six points let's see what is priced into the options this is how we understand if this is a good setup this is how we understand if we're on the right side of this trade so T options we are trading the March 20th and usually I never tell anybody about what we are trading in the premium group but right now I'm just gonna give you some insight on what my group is trading and why we're doing it so we are trading the T 18 t options for $39 so I'm just gonna put that on the screen they're trading at about 60 $60 we're gonna price in a call or sorry I've clicked and we'll price that in around $39 as well so both of those at $39 have an expected move of 1.76 so meaning we can only move out about 1.7 dollars on the call so that would bring us to about 40 point-five or sorry 40.5 and down that would bring us to about thirty seven point two five and that just is the expected move in the next couple months forty again what did I tell you earlier our expected move is forty three dollars which is a two dollar surplus on what is priced and for the options this is what we call opportunity and this is what tells us we're on the right side of the trade funny thing is as I am writing this up T actually gaps up almost a dollar from where we entered today one dollar and a forty dollar stock just look at these comments eighteen T plowed right through resistant line after hours hoping T can keep running in the a.m. I'm so pumped I didn't know this was happening till I was making the video but right now we're getting a dollar move which is basically half of what it's priced into these options as you can see we have seventy six more sense to go and that's the whole move that was priced in so right now we are crushing the expected move because we have the great setup and we had options that were priced very cheaply so right here's our price and move using the options and using the calls and puts premium as we scroll higher here's our gold move this is what we found using the charts and using support and resistance lines as we can see we're gonna have a lot more room to go above that priced and move and because we're going larger than the expected move that's where we can really crush the Greeks and actually make some money on it now I'm gonna flip the scenario this is where we start getting into trouble is when that priced and move is so large and it doesn't matter that's above our goal move it might actually be a good thing if we're expecting a large move and we're somewhere in the middle but the worst thing can happen is when we have a huge price in move and it doesn't end up happening or it ends up trading sideways and it'll just be killing theta and Vega all those Greeks are gonna lose value every single day because that move may be way too big to actually happen and when that is priced in when the options are actually showing that that's where I like to stay away from certain setups so when the price to move is so large that's where you can't really make a lot of money but when we have a small price to end move and we're expecting a large move that's where we start seeing opportunity in the market so I'll give you a classic example of this Tesla is one stock that has just huge huge option value right now the premiums are trading at so much money meaning they're pricing in this huge move every single week and some weeks it may not move that much so these options are trading at $3,600 again multiply that by 2 that's your expected move for the week for Tesla so we're gonna add that have those calls and puts and we'll even do the same strike price so we're pricing as we're pricing in a $76 move for Tesla in here I'll show you the chart basically show you what it looks like and how possible this is but most of the time if we trade sideways stocks like this and options like this completely get crushed and these are the ones you want to stay away from where they have these huge priced and moves that are not possible so I'll draw something that is just something I see right away we have trendline support we just keep bouncing and bouncing and bouncing and bouncing off this and again if you are ever curious on how I look at charts and how I understand setups I'm releasing this book bulletproof setups in the next couple weeks if you want it market moves not calm make sure you head there it's gonna be amazing and I think it's really gonna open up and give you guys the edge in the market so right here we have tests like seventy seven hundred and seventy dollars for us to us to move up seven hundred sorry seventy five dollars we would be at about 850 which would put us right there I'm gonna mark that on the screen so that's a very very large move the last time we moved $75 in Tesla was right around down here so we moved from here from 700 all the way up to about around 800 so $100 move so for us to do that again it's really stretching us we have four days to do it it doesn't seem very likely and I'm gonna show you why this is a very very very bad thing when you find these options that have this huge price and move so the range for this stock right here as a hovering above it is about five to ten dollars five to ten dollars for this 45 minute candle so that is not a $75 move we go to the next candle that's about a fifteen dollar candle as well not a $75 move those two candles together about 25 but still not 75 so unfortunately that huge huge move that we're all expecting can get really really beaten down if we trade sideways like as you can see what's been happening with this chart here just a lot of sideways movement from Tesla and again these options just keep decaying every time we trade sideways and don't actually hit that longer huge move that $75 price and move and here's the other problem with these huge options that cost a lot of money if we have theta being this high this can also be a killer because the next morning when you wake up you're just gonna lose this much money right away just for waking up that's how much you're gonna lose this turns out to be four hundred and seventy five dollars that's a lot of money that's about a five dollar priced and move so you're losing about five dollars priced in every single day so you just need this to move five dollars just to break even which is also putting you at a setback so if you need something to move just to break even that much that's gonna hurt you so the best thing I tell everyone to do is trade things under a hundred bucks trade things with low volatility and they're gonna have things like 18t that I showed you earlier that have these very very small price to end moves and if you can find a chart that shows a larger move that basically counter counteracts the one that that we're seeing and the options that's where it gets exciting so I'm going to show you one that's pretty exciting this is another one of the indexes this is going to be the Excel U which is going to be utilities this can be the utility index for and we're gonna check out the options and I love these because even if we got to March 20th these are trading it at under 100 bucks so you can get a pretty sizable move if the charts look good and just completely crushed the priced in move so just like 18 t we have a 179 dollar option with a price and move of 1.7 dollars so we add that to the calls we just need to hit about seventy point eight to break even or we have to drop to about 67 point two to break even and what I do is I'll go to excel you and I'll actually look at the chart to see what's possible and what I do look at as I look at the Bollinger Bands I see how big they are because that is basically telling us how much movement we can see you can look at the ATR which is the average true range that's just a number you can look at at any time so as we can see here the average movement per week is about that whole range we said so $68 all the way up to 69 fifty so that's about one point five so just per week we are already moving more than that that's what or equal to what's priced in so this is a great option to trade because of that and you'll just make tons of money during these weekly swings just doing that I mean just today let's just check out this the options were down 33 percent and the calls were up click-click-click they're up about 14 15 percent so that just shows you I mean we only moved 0.36% so that shows you the magnitude of how much movement you can get up and down and again I'm gonna move to the monthly chart to show you what's possible here so just moving per month and again we have March 20th on these options so that's about two months away so in two months this is how much we've moved in options or sorry in the stock from sixty-three all the way up to 69 so it's a six-point move and again options are only pricing at a one point seven dollar move so that's gonna be about four times what's priced in I'm just gonna show you how much you would make if we got that six dollar move like the last two months that we had and all you have to do is just scroll down different strike prices so this option if it went up six dollars from here this this is put I'm sorry we'll go to calls if we now the call and went up six dollars all we have to do is scroll down to the 63s so this $86 option would go up to about six hundred dollars so that's almost five hundred percent returns six hundred percent return that's huge and that's only huge because there's less theta less Vega and it's just a very very tiny move that's priced in and if we can find the charts to show us the larger move this is what's exciting and this is what every trader is missing in the Arsenal is understanding the smaller stocks that have smaller priced and moves they keep going towards the bigger ones Tesla Amazon Netflix Apple all those bigger ones are really gonna crush you because they have these huge boobs that are priced in and if those moves don't happen it's gonna hurt you as an options trader so the best thing you do is trade things that have small price to end moves and just try to now great setups with it hopefully I'm getting through to you because this is the bread and butter of options trading again seven days for free if you want access in my group we just had a huge huge win with teeth AT&T right now from t-mobile merger and I do think this is gonna give us a hundred percent to 150 percent tomorrow super exciting lastly I'm gonna link a video that's gonna tell you exactly when to enter in exit trades in the best moment stay tuned I've been training patterns in the stock market for the last five years successfully so in this video on a breakdown technical analysis charting the best tutorial you can ever find on YouTube

Channel: Market Moves - Matt Giannino

Views: 25,393

Rating: 4.8672986 out of 5

Keywords: option trading strategies, option trading strategies robinhood, option trading strategies for beginners, option trading, option trading for beginners, option trading robinhood, secret option trading strategy, option trading explained, how to make money trading options, day trading, swing trading, day trading options, robinhood app, robinhood, how to trade options, options trading, stock market, trading 101, stocks 101, trading apps, day trading 101, explained, strategy, options

Id: xv4vy6nFB04

Length: 17min 16sec (1036 seconds)

Published: Wed Feb 12 2020