Profit Blueprint from Selling Options on Expiration Day for Easy Weekly Income - MasterTrader.com

hi I'm Dan Gibby and in the next 40 minutes or so we have a fantastic power packed presentation here for you not only on the power of our high probability setup of selling options and spreads around the patterns but I am going to focus specifically after we get through the the basics on why selling these options with the shortest amount of time even on expiration day provides tremendous opportunities for additional income that don't take a lot of time so let's begin so here's what we're gonna cover I don't I don't care what type of trader you are your short term day trader you're an investor you have a money manager learning the power of selling these credit spreads on any timeframe you want even though we're gonna focus on short-term today is gonna do nothing but increase the current level of success that you are already experiencing or not experiencing I'm going to show you why we do these and how to start doing these and they're just gonna turbocharged your returns which are easier to trade think trading stocks alone or or any instrument ETFs futures commodities currencies etc and that's because of the nature of the the premium component inherent and option pricing which we're going to cover of course I'm going to show you how to generate this passive income and this is this is all we're focused on in shorting options on the day of expiration we are merely calling a top or bottom in the stock or ETF for the current day that's it and we get paid for making that determination I've been at this for over 25 years there is nothing you can throw at me that I haven't seen before just you know it could be a different variation of course so I've learned from my errors I love option trading because for me there's many ways to skin the cat of success in the financial markets I was even mentioning in the our master trader greenroom today that I define trading success as anyone who can objectively apply their methodology to the markets on whatever timeframe they're trading to consistently pull money out of the markets even if it's I don't care if you're looking at the moon that's at certain phases if you can do it consistently and you have a statistical edge then you're successful I love trading options both directional and what I refer to as income trading strategy which is the focus of today's options session because it has a huge cushion or edge if you will to be wrong and you still profit my business partner and good friend Greg Capra we've been working together for over 20 years and he's the most phenomenal market technician I met in my life I actually you know sat right next to him for years they learning from him and so we mirror our respective skills and technical analysis and option trading to come up with this phenomenal easy to teach easy to create easy to manage objective strategy to trading and investing in stocks and options our obligatory quick disclaimer look it's common sense but the SEC wants to make me tell you the obvious whenever you're speculating on anything and they're in the real estate market in the stock market we are investing our capital with the intent to make a return on it so that involves risk of course but master we do it again you're gonna keep hearing me say the word objective if you just go to Webster's dictionary objective means presently existing in fact it is what it is we don't subject our wishes on wanting the underlying instrument to do something that's based on supply and demand which is a reflection of the entire world's marketplace beliefs of what's strong and what's week and what fair value is we just follow the truth our approach to shorting these options and spreads it's the rapid time decay I'll get into that a moment and we're just earning a weekly and monthly paycheck by selling these we're gonna literally get paid by selling premium predicting where a stock is not going to go we do trade directionally and that is when the multiple timeframes are in alignment we're looking for a big gain and we put on directional stock and option trades in today's session we call it an income trade where we want to put money in our pocket for making the educated prediction based on charts that I don't care what direction it goes it's just not going to my short strike and I get rewarded for that you can't walk up to the stock department and tell them that that's a trade you want to put on they're gonna say sir ma'am you're at the wrong booth all I offer is do you want to buy it or short it that's all I got for you so that that's that's uni-directional you got to make a bullish or bearish bias and we do that of course with that that's in our toolkit absolutely everything at master trader starts with the chart pattern multiple time frames we have another saying no pattern no trade end of story once we do have a pattern we decide how bullish how bearish are we on it and then we go to our stock and option toolkit to mirror the trade with our bias in selling these spreads as you're gonna see we don't have to enter them with perfection as we do with a directional trade because of the nature of we're just call on a short term top or bottom and getting paid through time decay we love volatility why because when we sell these options both greed and fear get overpriced so when we sell these call and put options or spreads we're getting paid handsomely for selling these overpriced options to the option buyer once we're in a trade we're simply in trade management mode I have another thing I hold no judgment on a stock what does that mean I don't look at fundamental state they're 100% useless to me I'm trading stock like inventory once it's in my inventory I want it to perform as I want it to perform and I adjust my management in between if it doesn't perform as I predicted similar to hire an employee in your business I fire them I take my stop-loss the prior presenter that you know had a great focus on taking your stop losses and we agree with that a stop loss is the point the line in the sand where we have predetermined that the trade is not working out as expected so we kill it similar to pulling a weed out of your rose garden similar to discounting merchandise that's not selling at a retailer all market environments we find these trades these are so easy for us to find every day whatever the markets doing up down sideways choppy this is a picture of why we like selling premium time decay options are a time depleting asset meaning if you buy a call or buying a put option they cost money and the stock has to perform as expected to the buyer in a you know a fairly quick amount of time depending on how long these days to expiration are or it's losing money like a melting ice cube we want that melting ice cube to melt as profits into our account using the charts of course 85% of options expire worthless right there ladies and gentlemen should tell you something there is a statistical edge to shorting them some option traders don't look at charts and I pity those I I feel bad for their followers being misled because I could look at every single one of their trade recommendations and if they use charts they would they would drastically increase their returns and that's what we do we time all of our trades with the charts so this this time decay curve is showing you that into expiration 30 days or less 10 days or less seven days or less hey what about the day of expiration that's what we're going to cover today it expires rapidly and I'm going to show you exactly how to do that so buyers and sellers of options just take a step back they have different expectations for putting that trade on why do people buy call and put options well they're paying money because they are speculating that they either want to buy which is bullish sell bearish something the underlying stock ETF commodity etc within a certain amount of time that's a directional trade for them they want to put a little money on the line and they want a high return on capital the sellers of those options we are putting the money that the option buyer paid for that caller put in our pocket and we're saying I'll take that bet you're gonna pay me X dollars a share to say this stocks not going lower or x per share of saying this stocks not going higher I'll take that bet and then I'll manage in between the money is 100% ours if it expires worthless which means it's out of the money which means that the option buyer who wanted it to move in that direction lost and it didn't move in that direction because they don't know how to reach charts like we do and it's 100% profit but again we're in trade management mode we didn't we don't hold the majority of our trades to hundred percent profitability we're in trade management mode and we're trying to get the most you know milk out of the coconut so to speak with reducing our exposure and the day of expiration has the least amount of exposure because we're gonna be selling options that expire today by definition higher probability of profit vers trading the stock alone why because the money I put in my pocket improves my cost basis in other words I like using the word cushion the money I receive relative to the strike price so I calculate my break even allows me for the stock to go against me and I still profit one of my favorite sayings and selling options and spreads and I love hearing it for my subscribers of course Dan the stock went way against me and I still closed it out at a profit that's because of time decay dr. Alexander elder famous author of training for living among other books highly recommend his material let's talk about what he said very briefly again different expectations 80 / 80 85 % of options expire worthless he calls them the casinos gamblers as mentioned greed and fear Drive option prices higher here's what dr. elder said and I can't I love it I can't agree more with this first sentence people buy hope and what is referring to is these out of the money puts and calls so priced that hope highly and that's what volatility does in the markets and then we're gonna sell it to them at those inflated prices so now interjecting the master creator method that's exactly what we do using the charts piti piti the option traders who don't use charts and he adds hey he's never met a long-term profitable option trader and he's referring to these novice gamblers who spend a little money on a big out of the money call option swinging for the fences like an idiot those are the ones he's talking about yeah you might win whatever percent it is who knows but you're constantly losing like buying a lottery ticket you're going to lose loose loose loose and you know someday you might get a payoff who knows master trader we we definitely teach as a directional trade how to properly buy options and spreads and legging into entire legging into two diagonal spreads but we do it intelligently where we're putting the option pricing methodology in our favor where we still get the cushion for the stock to go against us and we profit we do it every day in our newsletter trading advisories and in our green trading room these are what we call pictures of bullish money patterns these are every one of these is a bullish short-term trend bullet turning point on whatever timeframe you're looking at and then combining multiple timeframes would dictate how bullish we are and what bullish strategy we put on whether it's directional or income but on selling a bullpup credit spread let's go we're gonna sell a put under support step one step two we're going to buy a further out of the money put to limit our risk to limit the capital required to put it on at the brokerage firm and we're gonna get a net credit for doing that that net credit is our potential maximum profit if it expires worthless at expiration again today's show we're talking about less than one day but we obviously teach this for as many days as you want but because of the theta time decay master trader doesn't sell options greater than 45 days we do 45 days unless our master trader weekly options trader specializes in this picture right here you know we have the bear case of course or sowing bear call credit spreads but we specialize in selling these options and spreads around these compelling patterns with ten days or less to expiration that is all you're going to see in that newsletter the creating weekly advisory letter and people love it it's a fantastic way to call a short-term top or bottom put money in our pocket generate passive weekly income end of story today though we're talking about doing that same thing with zero days to expiration here's my checklist let's jump into the meat of this so checklist expiration day and times differ depending on what you're training so you got a you know you a zero days to expiration is going to change like spiders have SP why the sp500 ETF has multiple expirations and you're going to see that that's one of our go-to trades in the weekly options trader and in our green trading room here's what you do you scan your personal trading universe you scan gaps you scan news you scant earnings why because you're gonna get high volatility for gaps and news and earnings we have a separate high implied volatility rank scan that we look at daily to find these compelling trades then we merge the master trader method with that high volatility to see if there's a match if there is we put on the trade a manager in between it's that simple folks that is our method you need a method you don't just come out into the market and and think you're a penultimate bull and get lucky that's I I did a recording yesterday that's what's referred to as the the unconscious in competent level of learning you learn the wrong way and you think you're a hero and guess what whatever profits you've earned from the market is temporary the market will take those profits back I promise you that then when they get to the conch is in competence level in other words they say to themselves and honestly looking in the mirror hey I'm a dummy I'm a novice and I know it I'm tired of losing that's when they find master trader if we find a compelling set up we're gonna short our spreads or naked follow your trade management and between close it into expiration if you don't want any overnight possible gap assignment risk against you close it at a penny there's an extended trading hours for some of these things be careful about that example one spiders this was the sell-off in March and even in February we I believe in the 80/20 principle and the markets when things line up we hit the accelerator and we're aggressive we made so many phenomenal trades on these spiders sell offs this is my go-to strategy I'm always giving away too much in these these webinars but that's okay and and and you're gonna hear people saying all proprietary this or that you know come come buy this from me you will never hear the word proprietary for master trader we teach you what we know and then it's seasoning after that if you want to succeed and learn how to fish so to speak on your own these sell offs and the spiders implied volatility spikes you can see in the heading ninety ninety-six percent I am looking to sell out of the money put spreads here's my intraday chart gives me an ideal pullback I'm selling and out of the money $10 white puts bread the day of expiration folks look at this please the stock is trading at around $265 this has to sink in because you should be salivating on your keyboard as I explain this so look at the pullback on the 15-minute chart around two hundred and sixty dollars we sold an out of the money put we buy an out of the money put simply to make it less capital-intensive if you sold a 10 lot on this that's 450 dollars because one contract represents 100 shares all I'm doing is calling a short-term bottom on the day 450 bucks right there you can raise your stop and even add to the position next one I have a WR B means wide range bar engulfing negated that bearish cap down now let me take a look at the intraday this gap down on the 15-minute chart look at that solid solid solid green bars that is rank what did I do when it pulled back the very next day at 11:15 in the morning we sold and that's the case naked look at look at the strike price I have circled there to 7950 the stock I'm as eyeballing it there is 280 50 so it was a dollar away that's my cushion a dollar away of cushion 21 cents a share 10 lot another 210 bucks just for calling a short-term bottom my stop is under the green support line and even if I stopped out a couple hours later because of the rapid evaporation of premium because remember again all these examples are zero days to expiration zero means the day of I did this at 11:15 Eastern so I have 4 hours and 45 minutes of risk I'm sorry for it goes to 4:15 Eastern because the these liquid ETFs trade to 4:15 so keep keep that of mine also and and you know income trades aren't gonna aren't gonna allow you to totally support yourself if you're wanting a hundred grand salary and quitting your job at at Facebook instead these are just high probability passive in comes they're easy to find and trade our directional trades are what's designed to create wealth because we you know when we sell options our max gain is a premium well what if I have a five ten twenty dollar target that's what our directional trades are about another example Boeing I could teach this to a seven-year-old child how to read trend is it up or down or sideways and is it extended yes this is extended then I had a bearish retracement into that big green bar at master trader we teach after an extended move like that well actually the first bar at a consolidation around three hundred bucks is what we call a wide range a nineteen bar that's very bullish right there but then when you get a similar wide range bar like that after many many many green bars far from the major moving averages that's a sign of exhaustion so we have this on our watch list to short either the stock or a bear call credit spread like we're doing in this example and then we aren't jumping in front of a moving train we're looking at the intraday charts to tell me when to get on that train and that's what this 15-minute chart did and this was the day of expiration lucky for us I call them the income trades as I said as opposed to directional look at that first 15-minute bar open relatively flat I'm even showing the pre market data in there between those dotted vertical lines I'm getting paid 48 cents a share 10 lot 480 dollars merely for saying that this stock ain't making a new high after that 15-minute bearish bar that's a bet I will take every day if you know how to read charts using master trader strategies it's like I'm wait the date of expiration it's this melting ice cube that premium you know I can't say minute-by-minute but you know every 15 minutes in depending on where the stock goes of course cuz you got directional risk then it is melting away the return on capital for this trade for those of you number crunchers the capital required to put on a credit spread is the spread width lettuce correct less credit received 5% return on my capital in one day now you know what if I tried sending it a promotional marketing email out that said that or if I got one for example from somebody say oh come to my webinar and I'm gonna teach you how to make 5% return a day I would hit the delete button so fast but here it is folks if this is reality the every trade I'm showing you here today and I have thousands more to show you if we have more time our real trades that we give our subscribers who profit with us sure we have stop outs because we take our line in the sand and selling options is similar to an insurance company or even Wynn Hotel we're collecting money over and over and over and over again and we're gonna have to pay some claims every now and then but the math works out in a beautiful uptrend because of our high probability 85 percent plus success rate coupled with our management strategies is when we lose we don't lose big unless there's a catastrophic gap against us we stop out and we lose you know 1 to 2 X the credit received so with 85% success that's fine two hours later we book 50% of max gain on that one let's continue here just another example I could I could go over so many but it's the same concept over and over use the charts selling out of the money caller put spread put money in your pocket managing between this one we sold you know 30 minute low we just said the stock ain't going over 360 we closed it a penny so we didn't have any crazy overnight gap risk 580 dollar trade if you did it 10:1 now for those option Greek people the reason I'm saying here a gamma risk is ridiculous there's some option traders out there that says oh my god danger danger Will Robinson don't ever sell short-term options now I'd really folks the reason they say that it's because gamma is one of the Greeks of option pricing which refers to the directional risk well guess what we managed directional risk with the charts with the master trader strategies so that risk to the them is our gift and expertise let that sink in we are looking at this pattern multiple days up gap and crap at major resistance then using the intraday timeframe 30-minute low 580 bucks for a couple hours of risk come on gamma risk is ridiculous to us as a Chartist Amazon I got two examples here we did both of them had a big bullish gap and and you know Amazon's have been a beast so these are only short-term income trades 7.6% gap up on this earnings day I always time these with intraday charts and looking at pre market data which I have blocked off there for you it rallied up topping tail sold off a little bit into the open selling right at the open so under that 15-minute bars low the very first bar of the day we sold this out of the money call 1665 which is five dollars over the pre-market high that's my cushion and I bought a further out of the money wand just so I wouldn't eat up a ton um you know capital requirement look at this folks but I'm intolerant a share on a $10 why'd you can do the math divided a dollar ten divided by 890 what is that like thirteen percent return for a couple hours and then you guys manage in between look lower lows lower highs there's absolutely no reason to get out of this trade the melting ice cube is my paycheck I wish they were expiring options every single day and that's what that's all I would do I think it's just an incredible edge that again the salivating and that's why spiders because they have Monday Wednesday Friday and Thursday on the monthlies multiple expirations this is Amazon just last Friday on its earnings so just another example it gapped up 87 bucks almost 5% there's my pre market and that resistance right that's pre market resistance first bar is look you know you can see where the volume is in that vertical line the very first bar is what the candlestick will siphon apart it's red it's lower low and lower high in the green room we put what I refer to as my Tier one trades in a thumbnail little five-minute chart and I'm just watching them step one is set up on the bigger timeframe step two is I'm waiting to strike five-minute low would have been aggressive but you know Amazon can you know these Fang stocks can be scary so I went not aggressive but count another bar green bar another bar red bar the next bar is when we sold this you see that see that beautiful arrow I'm just watching it I'm watching the supply and demand being created through these candlesticks because that's exactly what candle measures right we sold the $1,900 call folks look the pre-market high was 1890 so we sold it $10.00 higher $10 wide a bear call vertical put a dollar a share in our pocket a dollar divided by $9 is 11% return on capital for a couple hours of risk my stop is the pre market highs rinse and repeat this is what we do this is what we teach in this strategy of course we have many other strategies but I'm talking about this one today so right there you see where I covered half why well it kind of you know got a base of support it took out the prior pivot high but because of time decay and because of volatility contraction on these earnings that have high volatility we specialize in selling you know some people like selling these high premium options into earnings we don't just because it's not our desire to deal with the gap risk those type of traders are saying oh I think all options are overpriced into earnings that volatility is too high that's fine you know back to what I said of if you can succeed objectively that's fine I genuinely don't care I want everyone to succeed you know properly that's a game we don't play I can show you hundreds and thousands of examples where they got run over by a truck expected move ten bucks it gaps up 30 so we like selling them after we see the gap because the implied volatility is still high so on this trade when we covered half that we sold for a dollar it was like fifteen cents and that's because the stock fell in our intended direction volatility fell and finally time decay time decay on selling an option that expires today evaporates quickly that's my little hourglass there like today for example if you want to look at your own charts I'm shocked sak K was one we did in the green trading room today my partner Greg shorted the stock it fell three four bucks and I was talking about selling and out of the money bear call spread not naked we could have got forty five cents a share with a dollar fifty cushion so just look at that one on your own that was what we did today now if you want to become serious about learning how to do this I again I gave you a very very valuable information here today because that's what we do I like I also like giving back but you know you aren't going to succeed just on this one little 45 minute webinar we have these three amazing packages that will teach you how to do this one high probability income option trade using a master trader method I have a five module advanced credit spreads course in 97 bucks it'll teach you just things we did today but more in-depth more about options calls puts buyers sellers what a spread is how to put it on what are the patterns I'm looking for how do I enter it how do I manage it both on the bull and the bear side 97 bucks the gold I this one took me over a year to make mastering because I because you know I would find all these other examples and scenarios and make a new module this has 12 comprehensive modules it has everything in the silver obviously but much greater detail many more examples specialty topics on trading ETFs on trading earnings before and after earnings I'm trading volatility ETFs on trading news much more on trade management 397 bucks it would be the best money you've ever spent and then finally just because and I'm gonna show you some testimonials here in a second platinum and then week has had so many subscribers asked us this they said guys look if I do this we do something for me in in this other so three months of our green trading room and the weekly options trader which I said ten days or less everything I just taught you here if you add the cost of those two add-ons it's five hundred sixty bucks so we're giving you for another two hundred dollars you get five hundred and sixty bucks of value there let's take a look at some of these these testimonials and I have I literally have like 40 already and the course just came out not too long ago so just read them yourself here if you're interested and I love not only giving great value and teaching people but I love receiving comments like this because I know that I've made a difference in their of life both in terms of objectively trading the markets but of having an impact for them and their family and you know importantly putting money in their pocket so just read some of these yourself and and I love them feel free to email me Dan at master trader comm check out our our master trader YouTube channel where we give tons of amazing you know free content on on trading stocks and options and to trade and invest happy trading and have a great weekend everybody and thanks again for for the environment [Music]

Channel: Master Trader

Views: 349,368

Rating: 4.6978612 out of 5

Keywords: Option trading, dan gibby, Greg Capra, Master Trader, option strategies, Stock Market, Technical analysis, gap trading, bullish option strategies, selling options, weekly option income, candlesticks, investing, swing trading, credit spreads, buying calls, buying puts, selling puts, bull put credit spreads, bull call theta, gamma, selling options expiration day, risk management, trader psychology

Id: 34ly4a0zTzM

Length: 39min 42sec (2382 seconds)

Published: Wed Aug 15 2018