Being a consistent, profitable options trader doesn't take much.
In fact, I'd even go as far to say it takes very little time and effort on a weekly basis. Yet, we've been told in the media (and through other publications and websites) that you have to have lots of money, trade fast or day trade to make it in this business.
It couldn't be further from the truth. . .
In today's episode, I want to help show you what it really takes and how you can start to implement simple tweaks to your daily routine to become more consistent and profitable.
Plus, we'll cover a recent trade we made in APC with a 70% chance of success selling options far away from the current stock price.
In Today's Show, You'll Learn About:
- Starts with confidence. If you don't have confidence in "WHY" you are trading the way you are then you'll easily let slip and move onto another strategy or system.
- Being disciplined is a lie (somewhat). We don't need to have it all the time, we just need it long enough for the habit to kick in and take over.
- Research from the University College of London showed in 2009 that it actually takes 66 days on average for people to form an automatic habit. Most of us are generally taught that we need 21 days, but here we can see that we might need 3X as much work to form the habit.
- Go small. Don't focus on big trades and huge positions. Little positions always will be more profitable.
- Don't get trapped in the "bad" trades. Each trade is equally important and you should celebrate the wins as much as you grown the losses.
- Laws of large numbers is my BFF. After 10 trades, your probability of success could vary by 20%. After 100 trades, the variance drops to roughly 10%. After 1,000 trades, it's less than 2%. After 100,000 trades, it's less than 0.0001%.
- Time-block your trading activities. If you can't build time for them you'll never find that consistent habit of making, adjusting and closing trades properly.
Links And Resources Mentioned In The Show:
- Show 006: If Every New Trader Did This 1 Thing They’d Make More Money
- What REAL Long-Term Trading Consistency Looks Like (Video Tutorial)
- Why You Need To Struggle When You Start Trading Options
- Why You Need to Diversify Your Trading Across Different Option Strategies (Video Tutorial)
- Show 032: How to Set Financial Goals – The Top 10 Mistakes People Make Constantly
- How Much Money Should You Invest In Options Trading?
- Show 033: Interview w/ Sarah Potter – Trading Weekly Options With Simple Strategies & Multiple Timeframes
Free Options Trading Courses:
- Options Basics [20 Videos]: Whether you're a completely new trader or an experienced trader, you'll still need to master the basics. The goal of this section is to help lay the groundwork for your education with some simple, yet important lessons surrounding options.
- Finding & Placing Trades [26 Videos]: Successful options trading is 100% dependent on your ability to find and enter trades that give you an "edge" in the market. This module helps teach you how to scan properly for and select the best strategies to execute smarter option trades each day.
- Pricing & Volatility [12 Videos]: This module includes lessons on mastering implied volatility and premium pricing for specific strategies. We'll also look at IV relativeness and percentiles which help you determine the best strategy to use for each and every possible market setup.
- Neutral Options Strategies [7 Videos]: The beauty of options is that you can trade the market within a neutral range either up or down. You'll learn to love sideways and range bound markets because of the opportunity to build non-directional strategies that profit if the stock goes up, down or nowhere at all.
- Bullish Options Strategies [12 Videos]: Naturally everyone wants to make money when the market is heading higher. In this module, we'll show you how to create specific strategies that profit from up trending markets including low IV strategies like calendars, diagonals, covered calls and direction debit spreads.
- Options Expiration & Assignment [11 Videos]: Our goal is to make sure you understand the logistics of how each process works and the parties involved. If you don’t feel confident in the expiration processes or have questions that you just can't seem to get answered, then this section will help you.
- Portfolio Management [16 Videos]: When I say "portfolio management" some people automatically assume you need a Masters from MIT to understand the concept and strategies - that is NOT the case. And in this module, you'll see why managing your risk trading options is actually quite simple.
- Trade Adjustments/Hedges [15 Videos]: In this popular module, we'll give you concrete examples of how you can hedge different options strategies to both reduce potential losses and give yourself an opportunity to profit if things turn around. Plus, we'll help you create an alert system to save time and make it more automatic.
- Professional Trading [14 Videos]: Honestly, this module isn't just for professional traders; it's for anyone who wants to have eventually options replace some (or all) of their monthly income. Because the reality is that mindset is everything if you truly want to earn a living trading options.
PDF Guides & Checklists:
- The Ultimate Options Strategy Guide [90 Pages]: Our most popular PDF workbook with detailed options strategy pages categorized by market direction. Read the whole guide in less than 15 mins and have it forever to reference.
- Earnings Trading Guide [33 Pages]: The ultimate guide to earnings trades including the top things to look for when playing these one-day volatility events, expected move calculations, best strategies to use, adjustments, etc.
- Implied Volatility (IV) Percentile Rank [3 Pages]: A cool, simple visual tool to help you understand how we should be trading based on the current IV rank of any particular stock and the best strategies for each blocked section of IV.
- Guide to Trade Size & Allocation [8 Pages]: Helping you figure out exactly how to calculate new position size as well as how much you should be allocating to your each position based on your overall portfolio balance.
- When to Exit/Manage Trades [7 Pages]: Broken down by option strategy we'll give you concrete guidelines on the best exit points and prices for each trade type to maximize your win rate and profits long-term.
- 7-Step Trade Entry Checklist [10 Pages]: Our top 7 things you should be double-checking before you enter your next trading. This quick checklist will help keep you out of harms way by making sure you make smarter entries.
Real-Money, LIVE Trading:
- IWM Iron Butterfly (Closing Trade): Exiting this IWM iron butterfly options trade gave us a $1,100+ profit after pinning the stock price one day before expiration at the peak of our spread.
- CMG Iron Condor (Opening Trade): I just recorded my live trading platform (and real money account) as I walked through the process of entering a new iron condor trade in CMG stock. Inside you'll see me analyze, price and fill the trade in real-time.
- APC Strangle (Closing Trade): Took about $150 out of this small APC strangle trade even after the stock moved completely against our short call strikes this month. But as always, implied volatility always trumps direction and because IV went down, the value of this spread dropped more-so than the impact of the directional move higher.
- IYR Call Credit Spread (Adjusting Trade): This adjustment is good for 2 reasons. First, it reduces the overall risk in the trade if IYR continues to move higher. Second, it still leaves room for the stock to fall back down into our new profit window.
- XHB Straddle (Closing Trade): We were able to bank a $120 profit early in the March expiration cycle for our XHB straddle with the stock trading right in the middle of our expected range.
- AAPL Call Calendar (Opening Trade): Look behind the scenes as I use our new watchlist software to filter quickly and find this AAPL call calendar spread trade during overall low implied volatility in the market.
- COF Strangle (Adjusting Trade): Here I recorded my live trading screen (and real money account) showing you the entire thought process we used to make an adjustment to my current short strangle in COF to reduce risk.
- GDX Strangle (Opening Trade): With gold's high IV we are getting into a new strangle with a 70% chance of success and a decent credit for selling option premium.
- IBB Iron Condor (Closing Trade): Today we're exiting an iron condor we traded in IBB for a $142 profit. Inside you'll see me analyze the exit price and fill the trade in real-time.
Thank You for Listening!
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