SPY Options Trading Strategy - Yield Consistent Profits

hey y'all this is options millionaire this is my official trading strategy video a lot of people ask me to make this video to kind of outline exactly what goes through my mind and what indicators i use and how i really execute my system on a day-to-day basis without any trade so i decided to create this for you i'm going to outline my tenants uh key pillars of my strategy and a couple of rules that i follow to keep me in check at all times and keep me from getting emotional and doing stupid stuff using this system that i've refined down from eight years of trading i was able to achieve a 91 win rate over the course of february and march when the market was very choppy a lot of people were losing money i was able to make a 91 win rate over this one rate i was at i averaged of anywhere between 10 to 20 percent sometimes a little more sometimes a little less all my losses were minimal because i use this system and stick to it as tight as i can so i think it's something i can help the general public because i think a big problem is a lot of new traders or anybody for that matter get caught up in over trading trading too much they don't know what to trade because they're looking at a thousand different stocks a thousand different charts they don't know what what which way is up so this system allows you to focus on one thing spy more specifically spy options i'll do another video based on options trading that's a more general broad stroke but this one i want to focus on spy options in my system so we're going to go ahead and go go ahead and get into it so i'm going to be looking for an spy option always that is five to seven days away in dte or a days till expiration two to three dollars away and strike from the current stock prices spy price that will usually put me around a two dollar premium call or put now i'm looking for that because that's a good litmus test when i'm looking for the options flow bam my eyes go right to that two dollar premium which narrows it down to that five to seven days give or take sometimes more sometimes less but that's a nice round number that allows me to make a trade quickly and analyze if that premium is undervalued or overvalued based on current market conditions and then i go from there but the biggest and most important in my aspect right now is no holding anything overnight because this system right now because the market is a little wonky and is very sensitive to news and stuff like that corona news tax news policy whatever that uh i don't want to wake up to a 50 loss because you can't sell your options obviously in pre-market or post or post pocket trading so you have to do during the day so i'm not holding anything overnight this purely day trades close and open during the day and then of course the most important thing of this strategy and any strategy is controlling your emotions there are no room for emotions in this in this market in this strategy if you need to get that in your system wake up in the morning watch some dr phil get it out come back and let's do some trading because there's no room for it here please go strictly by what the chart's telling us the market does not care how you feel so you have to look at exactly what the market is telling you and what the charts are telling you to make a decision it's a nice easy system streamlined a couple of good rules to follow you know you can adjust it to fit your own current for your tolerance of risk but this is what i like some people ask me why don't i trade shorter dtes if i'm going to be a day trading because i get more volatility out of it well because if a trade goes against me or if i want to you know if i want to let the stock breathe just normal oscillations of the day pricing i don't want to get stopped out too quickly or i don't want to i don't want to face a 20 loss before things go positive and if you choose a zero dte or two dte the volatility may do that to you you may start facing 20 losses if you don't time things just right and you get stopped out or you have to go through this the crazy emotions of looking at the minus 20 before things go green so i like to go my current tolerance for risk puts me at this five to seven dte two to three dollar strike price which allows the stock to breathe during the day and not stop out my options it allows me to go green and it's worked out me pretty sort of worked out pretty well when i get a good movement in price i can easily yield 10 to 20 percent pretty consistently and if it goes against me i can get out quickly without facing a big loss and if it does go if the price does fluctuate down it doesn't like the stock won't usually stop me out too often so yeah that that's pretty much it nice and easy straightforward and i'll elaborate here now the next step is actually going by what indicators i use which a lot of people ask me so let's go over my indicators so i use very simple very popular uh indicators that are usually revolve around volume and then price action which i think volume and price action are the king of all indicators not pattern analysis not technical analysis but volume and price action so the first one is the 8 ema blue line right there 21 ema yellow whole moving average pink volume which is very common but very very very important i think the most important indicator a lot of people underestimate it it's the simple moving averages i use a very various simple moving averages but i'm just going to highlight the 200 here because i don't want to put five different lines up here squeeze momentum indicator there and then rsi i also use macd but i'm not going to highlight in this video because i don't want to clutter up this chart too much but in addition to all these i also use the fibonacci retracement which i think is very very crucial in defining levels i don't have the fibonacci up here but after i explain these i'll zoom out to the three month and i'll pull a fibonacci retracement to show you so i'll start out first and foremost with the 8 ema that's the most important actually the 8ma tied in with the 21 ema is uh my most important one and basically what i play with day trading on the five minute chart is uh the crossover so you can kind of see here we'll start out there the eight is the blue crosses up through the 21. that would be my first indication now i will i will backstep here no indication no matter how confident you are in its ability should be used on its own always use it in conjunction with other indicators the more indicators agree with each other the more confidence i have in a trade so here i'm on the daily five minute chart i'll go over time frames later on uh i have all my indicators here the first thing i'm looking for is the 8 to 21 crossover so you can see here the 8 and 21 was up and down oscillating i don't really care about this movement i'm care about these big moves here this type of stuff so here the 8 and 21 crosses through the or the 8 crosses through the 21. when it does that the first thing i'm looking for is is it going to fail i don't want to take it right at the crossover because it very well could pop through and then fail and come back down so i'm going to look for the confirmation of the price action so this thing pops up boom we got a big green candle confirmation everything is rolling bright green so nice and easy you can come back here and i'll look for a few indications where it fails here's a good one where it fails like if you are looking to take a put the 8 comes down pops on the 21 price action drops still the 21 you don't want to take a put because it bounced right off boom it came through whereas looking here this is that big move when biden came out and announced his tax plan tanked the market on thursday the 22nd boom the 828 crossed through the 21 and then down she went never actually competed with the 21 again until way on down further in the afternoon so that would have been a good place to take puts but it's also based on other locations which we'll discuss later come back here let's see one where it actually failed uh let's come through here let's come through here uh oh here's a good one okay so the 21 crosses up after this downtrend the corner one crosses up touches the 21 but look it fails comes down actually comes above but touches fails come that bounces up and then fails again so you don't want to actually take a position here with calls you want confirmatory price action which this is right here is beautiful conformatory protection the bulls take over boom you've got a big old engulfing green candle and off we go great indications now the whole moving average is designed to decrease lag while still making the nice smoothness of a moving average line you can see the whole moving average here in the pink line i use it for identifying entry points it's really good at developing overall trends whether very quickly or in the long term as well but you can kind of see and the pink line here is the whole it moves a lot quicker than the 8 and the 21 ema because it reduces all that lag so i just like to use it to kind of give me an indication hey you know gives me a nudge hey things are going south i don't use it for crossovers because it it's calculated differently in the admas you're going to give us a false indication if you get crossovers so i mean this thing crosses over left and right on the ema so i just use it over to identify overall trends a good entry point when i see a huge sharp downward turn like maybe like right here or like right here or upwards like i know things are trending in the right direction and i'll i'll look to take a position the simple moving averages are something that i think every trader has either at least started out in it's just a it's tried and true method this one here i've got showing as a 200 movie simple moving average and i use that for long-term analysis so for looking out here to the six-month chart you know that's the fibonacci right there but if you see the six-month chart here you see where every time uh the price actually comes down it bounces off the 200 it's it's a great indication uh of where things could go if in the event that the price action approaches the 200. now you can you definitely see like in order for us to approach 200 we need a cons a significant correction in the market which does happen um so in order to show you this more clearly i'm going to zoom out pretty far this is the one-year chart you can kind of see we haven't touched the 200 since june of 2020 uh and we blasted through it through through corona announcement here this was march and february so you can definitely see that i mean a cosmic event brought this thing down since then we haven't touched it uh we've approached it and since then we've been off to the races as we know 2020 was a crazy bull year but the big thing that i look at with the 200 is that any time that a stock or an etf approaches 15 extended above the 200 you can anticipate some sort of downturn in the near future and that's where we are now we're actually a little over 16 percent extended over the 200. and last time we were this far above it uh quite this far i mean we were a lot here but that's one thing or another was uh back here obviously but i don't count this because that was a extenuated circumstance corona that was a natural market phenomenon so i'm going to go back to a january of 2018 which is good it's a good point here so here we are pretty far extended above the 200. here yeah but here it was big times about 15 a little more and uh that was january 26 was the highest day and then boom we came right back down and hit the 21. so i can anticipate some sort of downturn and that's this is just an example of how i use it i look for 15 ish to identify a level of extension above the 200. that's a good way to look at this the volume indicator is a very basic indicator and i won't spend too much time talking about that but it basically shows visually the size of the selling and buying in a given period and displays that whether it's in a green or red candle and it's displayed along but i have it displayed along the bottom but you can see here when we have this big sell-off boom you got this big indication of selling volume so this is pretty basic the squeezebomb battery indicator right here is one of my favorite indicators it's new to me it was uh brought to me by someone in the discord awesome indicator and uh yeah it does a great job of displaying entry and exit points the basic principles of this is that you're looking for direction one way or the other so it's a squeeze momentum which means that identifies when a price action is squeezing and then when the squeeze releases when the screen screen squeeze releases that means that the price is moving one way or the other so little black crosses here you can kind of see along the line that indicates you're in the squeeze which means that the bulls and bears the sellers and buyers are fighting it out so you see like right here you have this kind of sideways price action here uh you got the black crosses so what i'm looking for is the first indication of the squeeze releasing in this case it's releasing to the upside you see that the the green candles go from dark green they switch to light green the light green is my first indication of all right i'm looking for a call here because it's going up second indication which would be my buy indication would be the black crosses turns gray that means the squeeze has officially released to the upside in this case and i'm going to be looking to take calls now just like everything else you don't want to use this alone you want to use it in conjunction with other indicators and i'll go over a good process about that earlier but my my main crossover is the 8 and 21 with the squeeze mobile my first cell indication would be a conservative cell indication would be when the candles turn dark green some people might wait it out until the squeeze completely re like re-engages which is the black crosses but conservative exit would be all right i'm gonna go ahead and take my profits when the uh candles turn green that means buyers are starting to fizzle out and we're going back into the squeeze and everything is inversely related on the downside if you want to take puts uh here would be a good time to take puts as long as the other indicators comply with with that now i'm going to look for big movements here i don't really i don't want to concern myself with these little things because you can kind of see these little ones don't really equate too much price movement so i want to wait for the big oscillations here that's where you're going to get your profits so so that comes with the volume so use that in conjunction with the volume using in your in your other indications and you know just be smart about it take your uh learn to trust your indicators and this one is a fantastic one to do on the bottom here we've got the rsi rsi is a great indication for real it's called relative strength so where's your strength at now i've got mine set to a 70 level and a 30 level and 70 means traditionally is that you're over bought in 30 means you're oversold so some people look at that like if here when it starts approaching down to 30 that means it's oversold and you're going to look for reversal to the upside here for a good example we reached overbought which is right here it dropped down below oversold and that was about right here and continued on down and then it started to recover upwards and then you saw the recovery so if you think if you see things rsi bouncing down here you can expect some sort of reversal and price movement because it is indicating oversold now once again use that in conjunction with other indicators but relative strength squeeze momo great things to do and to tie it into your system now last and certainly not least is the fibonacci retracement tool and the fibonacci is fantastic for identifying levels at which the price action likes to act and this is not necessarily an entry or exit indicator to determine when you want to get in and out but it does determine where the price could go so i'm going to pull one here fibonacci there now how you pull the fibonacci is you go you find a trend which here is a trend this this is different so this starts the new trend here upwards you you p you pin the lowest peak of the trend and you go to the highest peak which would be friday because we hit just above 418 there and this identifies the levels in which the price acts as you can see and they're identified by the fibonacci sequence numbers which if you don't know about the fibonacci do a little reading 1.786 6185 382 236 and of course zero which is the top level so you pin it to the top level you see the price comes on up it pops through the first level and then it uses this level as support all the way through so one because here one two three four and we approach it just above it so right around that four eleven ish number and then now here we are back again now the funny thing about this is that once you peek on this you can kind of go back to historicals and see how the price acts similarly and theory suggests that anytime the price peaks it always eventually comes back down to the 50 level which is this right here in this case it would be four or one zero four so when the price does downturn i expect the price to go down to 401 and i will begin to look at maybe a little a little bit longer puts to capture some of those profits so let's pull another one on this trend fibonacci let's go to the lowest peak let's go up to the highest right here see comes on up and pops through uses a support come up hits peaks again peaks again and then finally falls breaks through the first level and comes all the way down eventually to the 50 right here and we're gonna do it again all right this one's already pulled so it pulled the bottom valley goes to the top pops through use this the first level as support several times one two three four times before like here pops again comes up and eventually falls down to the 50 right here actually blows though it blows through the 50 a little bit before starting a new trend and then here let's do this one just pick a random one right here so it comes right down just didn't quite touch the 50 but approaches it right there so you can kind of see this is a good indication of where uh mainly i use it for support levels i see where the price action is forming support at on these levels and and then i dial into why that they're using that support and then where it actually falls down it bounces off of which you can kind of see right around this 50 level is a great indication of where things are going to go so when this price action does finally break i will be looking for this to come down to the 400 level so that's my training strategy in a nutshell i know a lot of people ask me about what indicators use and how i use them and that's why i want to create this video so you can kind of come back to this video um look through this stuff and and figure out how my one works in any given day but before we end this video i wanted to leave you with one list of things that is very important and in order importance people get wrapped up in the weeds they get wrapped up in all this nonsense and they know technical indicators and what's going on but i think the most successful traders out there will tell you that the volume is very telling the price action block sells the volume will tell you everything you need to know at least a majority of what you need to know so the most important thing is volume price action second is market awareness you need to know how the market's manipulated through news through media through social media through geopolitical events military events etc how does a certain event affect a certain price how does a pr president or a president's attitude or present social media affect the price action so being very market aware is very crucial in developing a successful strategy and then after those two things then you can start diving into technical analysis chart reading plotting lines stuff like that because once you don't if you don't have the first two technical trading doesn't matter because you don't if if you're slow so solely dependent on technical analysis then you're gonna get smoked if you don't understand why things are doing things in the long term why is this market up on a friday why is this marking up on a tuesday like why so you need to understand why those things happen before you get there but technical analysis is third on this list and then finally unfortunately there's no way a quick way to do this and that's experience getting through getting through all the market the ups and downs paying what's what i call market tuition and that is when you do stupid with a bunch of zeros behind it when you make a stupid mistake and you pay for it big time that's market experience developing that over the course of years is paramount so those four things volume market awareness technical analysis and experience and that'll get you an awesome trading strategy that can last generations anyway guys thanks for watching this video please like and subscribe so you can get further updates on the educational videos i'll be posting in the future that'll be pertaining not only to spy options but just how to options trade in general so you can be profitable in the long term also please go ahead and follow me on all my social media so i can grow this brand and help as many people as possible guys thanks for being here take it easy be profitable be smart see you

Channel: Options Millionaire

Views: 94,345

Rating: 4.882319 out of 5

Keywords: options trading for beginners, options trading 101, options trading basics, how to trade options, options trading, projectoption, call options, put options, intrinsic value options, extrinsic value options, exercise and assignment, how to buy call options, how to buy put options, shorting options, implied volatility explained, what is a strike price, option contract multiplier, stock options trading 101, call option basics, options trading explained, stocks, options, SPY

Id: MVscOHAaeLs

Length: 20min 3sec (1203 seconds)

Published: Sun Apr 25 2021

Reddit Comments

[u/Natural_Hold3744]

I cannot find the squeeze momentum indicator on TOS. Is it the same as TTM_Squeeze? Thanks

[u/AmbitionCurious8780]

Can you point me to some books you’ve read to get you where you’re at?

[u/TheRod269]

Jump on the arcadia pharmaceutical ride going to the moon

[u/Hungry_Biscotti934]

Any idea what TTM is called or where to find on the Power ETrade charts?