Half the people expect the stock market to keep going up and the other half expect the market to correct downwards. As a professional investor and trader, we can use Advanced Option Trading Tactics to generate profits regardless of stock market direction.
Give Me An Example Of An Advanced Option Trading Tactics
One of this Advanced Option Trading Tactics is the Snipex Double Calendar Spread.
This strategy setup 2 calendar spreads based on the upper and lower projected range of a stock. Personally I will use this more in a situation where the stock appears to be moving sideway with no clear indication of which way it can turn.
Double diagonals are arguably one of the hardest option trades to understand. You can put the whole trade on at once as a double diagonal, or you can put each leg on separately but they’re the same trade basically. This video below shows how to use this advanced option trading tactics very clearly in the video below. Do take some serious notes as this is one of the most powerful methods that I have learnt so far.
How Does This Makes Money?
In the example from the video above, he buys both legs of the trade for a cost of $500.
Since options are highly leveraged, one leg can make more than $500, pay for the trade and have money left over. Where it cancels out is the last chance to get out of the trade without losing money.
This trade is hard to explain but even at expiration both legs are still worth money even if price is at one peak or the other. That’s how it pays for some breathing room beyond the long strikes (if you buy the far dated protection slightly more out of the money).
The potential returns from that example trade could go as high as $2,000+. So the ROI is definitely worth picking up this skillsets.
Having said the above, you will still need to monitor the trade on daily basis and adjust if needed. This monitoring and adjustment should take you no more than 10 minutes. So start small and add this to your trading knowledge.
Disclaimer: First off, please note that this article is not an recommendation for you to buy or sell any stocks. You need to do your own analysis and take your own decision based on your current skills/experience level. I am just sharing this as more of an educational insights. Personally I have been trading for more than 20 years myself and this is part of the techniques that I find useful.
That’s it. All the best to your trading success.
To your success,
P.S. Below are my previous posts related to trading