OAP 101: The Ultimate Guide To Profitably Trading Options Full-Time

Download The "Ultimate" Options Strategy Guide

I believe that on some level every new trader dreams of trading options full time and not working a regular job. The reality is however, that you're need a lot of capital before you make the leap to full time trading and that means you'll have to learn how to effectively trading options while working your day job. Hard as it may seem at first, working full time and trading options is not that complicated nor is it impossible if you're smart about your time and the strategies you focus on. In today's show I want to cover 10 questions that our community members asked with my answers as to how I suggest working options trading into your busy work schedule. Note also that I also work a full time job as a stay at home dad to two little girls while running our massive community of 60,000+ traders. I've also had to learn to be incredibly efficient with my time actually making trades just like you.

Key Points from Today's Show:

  • The best thing about trading with a full-time job, is learning to hone your skills. 
  • Making the most of your time is crucial when trading is your side-gig.

No Time to Spend Looking at the Markets

  • Take the decision-making out of your hands, so it becomes a numbers-based situation.
  • If 30 minutes is all you can carve out for trading, then you have to maximize that time. 
  • Find the time during the day that best suits your own schedule. 

The Best Time to Trade

  • Volume-wise, the most active times at the market are at the open and the close.
  • Ultimately, it does not matter what time you trade over the long-term.
  • As a long as you have some consistency of when you trade, it should not make that big of a difference.

Missing Trade Opportunities

  • Remember: the trades you see in front of you are not the only trades in the world.
  • There will always be another setup and trade opportunities; rarely are they once in a life-time.
  • Never rush your trade decisions, and do not worry if you cannot get into a trade.

Trading Frequency

  • Use the days that you can access the markets to be more active in trading. 
  • If you can only access the market one-day a week, increase your trading activity on that day.
  • However, trading multiple days is more ideal than trading only one day per week.

Accessing a Computer During Work

  • Use other devices like a tablet or smartphone to gain access to the markets. 
  • Carve out time to go out for lunch and get access to a computer elsewhere.
  • Learn how to trade on your smartphone using mobile apps. 

Using Contingent Orders

  • The easiest way to automate your trades is through contingent orders for closing trades.
  • Use a Good Till Cancelled (GTC) order to get out of profit target. 
  • Can use contingent orders for order entry, but it does become more difficult. 
  • With open contingent orders, double-check to adjust strike prices according to open price.
  • Never use market orders, only use contingent orders that are limit orders.

Transitioning Out of Your Full-Time Job

  • First, get to the point where you start paying yourself a salary out of your trading account. 
  • To transition out of your job, you have to make some sacrifices.
  • Cut down as many of your expenses as you can to set yourself up for success early on. 
  • Take as little as $50 out of your account each month, automatically, to pay one bill. 
  • As your account grows in value, increase the amount you take out each month.
  • Create a snowball effect so you can eventually transition out of your job over a few years. 

Efficiency: How to be Lean and Mean

  • To be most efficient, focus on a couple of different strategies.
  • Use the trade optimizer and back-testing software to find what strategies work best for you. 
  • Cut out the strategies that do not work for your schedule.

How Many Symbols to Trade

  • Realize that there are seasons of activity where you are more active versus not.
  • Focus on a small collection of symbols that you can mechanically trade as much as possible.
  • Back-test the few strategies that you focus in on, and pick what works best for you.

A Realistic Expectation of Returns

  • The expectation of returns is different for everybody, dependent on several factors.
  • A higher return goal will mean much more risk and volatility in your account. 
  • The 15% ballpark is a reasonable return to expect when consistently trading.

Option Alpha Podcast Show Notes[FREE Download] Podcast Show Notes & Transcript PDF: No time to read the show notes right now? We've made it incredibly easy for you to save time by giving you instant access to the complete digital version of today's show. Click Here to Download Your FREE Copy

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.

Option Trader Q&A w/ Mark

Trader Q&A is our favorite segment of the show because we get to hear from one of our community members and help answer their questions live on the air. This week's question comes from Mark who asks:

I have been trading for three years and I have not been successful. Within the last six months, I've discovered a new trading method and I have already identified many flaws from my previous training, which was expensive. I only have $5,000 in my trading account. How best should I return to trading? Should I do a monthly credit spread? Should I do a debit spread? I'm thinking of a couple of monthly credit spreads and iron condors based on your watchlist, which I purchased and I think it's of great value.

Remember, if you’d like to get your question answered here on the podcast or LIVE on Facebook & Periscope, head over to OptionAlpha.com/ASK and click the big red record button in the middle of the screen and leave me a private voicemail. There’s no software to download or install and it’s incredibly easy.

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:

  • EWZ Iron Butterfly (Closing Trade): After nearly pinning the stock at our short strikes, and thanks to the volatility drop, we netted a $600 profit on this iron butterfly trade.
  • VXX Short Call (Closing Trade): One of the most consistent and profitable options trades we can make is shorting pure volatility with VXX and today we closed this naked short call in VXX after a couple days for a $420 profit.
  • DIA Iron Condor (Adjusting Trade): This neutral iron condor in DIA is need of a quick adjustment early this week as the market continues to rally. In this video, we'll discuss why I'm adding an additional put credit spread while also choosing NOT to close out of our current put credit spread due to pricing reasons.
  • COP Short Put (Closing Trade): These single short puts in COP acted as a great hedge for our other bearish bets in oil this month and helped smooth out our returns after we closed them for a nice big profit.
  • TSLA Put Debit Spread (Closing Trade): Although many people thought we were crazy for getting bearish in TSLA this pre-earnings put debit spread trade made us $200 today. After the huge run up from $140 to $260 and getting some technical sell signals, we were pretty sure this stock would pull back.
  • MON Iron Condor (Closing Trade): Following a huge drop in implied volatility we worked hard to close this MON iron condor trade adjusting the order multiple times to fill before the end of the day.
  • IBB Call Debit Spread (Opening Trade): We'll show you how I started searching for a new bullish trade and eventually found a low volatility trade in IBB looking for a move higher to hedge our portfolio.
  • TLT Iron Butterfly (Closing Trade): Following the Brexit vote TLT and bonds traded in a nearly $8 range really quickly - even still the drop in implied volatility helped generate a $330 profit for us.
  • XBI Call Debit Spread (Closing Trade): Got lucky picking the exact bottom for our entry in this call debit spread for the XBI biotech ETF which ultimately was closed for a profit of $165 today on the rally higher.
  • COH Iron Butterfly (Earnings Trade): Shortly after the market open we close out of our COH earnings trade for about a $160 profit, leaving just 1 leg on to expire worthless.
  • EWW Debit Spread (Closing Trade): Using some of the technical analysis signals we discovered in our backtesting research, we were able to make a quick $130 profit on this bearish EWW debit spread trade.
  • IBM Iron Condor (Earnings Trade): Shortly after the market opened you'll follow along with me as we watch volatility drop and liquidity come into the market before closing out the position for $250 profit.
  • SLV Short Straddle (Opening Trade): Using our watch list software we decided to continue to add to our existing SLV short straddle position with a new set of strike prices reflective of the move lower in the ETF recently.

Thank You for Listening!

I'm humbled that you took the time out of your day to listen to our show, and I never take that for granted. If you have any tips, suggestions or comments about this episode or topics you'd like to hear me cover, just add your thoughts below in the comment section.

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About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he’s a Full-time Options Trader and Real Estate Investor.

He’s been interviewed on dozens of investing websites/podcasts and he’s been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and two daughters.