If you’re interested in options trading, chances are you want to make money.
Even the most skilled options traders lose from time to time, but learning how to mitigate losing trades is one of the most important aspects of trading.
David Jaffee of BestStockStrategy.com utilizes a strategy designed to maximize profits while minimizing risks.
By selling options, traders can win up to 98% of their trades and manage losses in order to come out ahead.
Successful option traders rely on the best option trading strategy.
Keep reading to learn the impact your option trading strategy has on your success.
Option Trading Strategies
There are plenty of common option trading strategies for traders to choose from.
Many traders fall into the trap of riskier strategies that promise big rewards.
They look for trades with big wins but often fail to realize the massive potential for loss.
Listening to options trading coaches that claim to make you rich quickly will only land you in hot water.
Instead, it is important to find an option trading strategy that offers consistent wins.
Small wins over time add up considerably, and you can grow your account and earn a profit slowly but surely.
The best way to be consistently profitable is for traders who are patient and disciplined to sell option premium.
When it comes to selling options, it is very easy to get started.
Opening an account with an online brokerage takes just a couple of hours, and you can refine your strategy in just a few minutes each day.
You only need a smartphone and an internet connection to make trades, and the probability of profit, when selling options, is high.
When trading options, you do not have to invest a lot of money upfront or wait a long time to close your trades.
Option Trading Example
Selling option premium does not require a lot of time, and you have the flexibility to invest as much or as little time as you prefer.
Selling options is also scalable.
You can start selling options whether you have a small account or tens of thousands available in the bank.
While there is no option strategy that guarantees a 100% win rate, selling options can get you pretty close (although you can still lose money overall even if you have a ~95%+ win rate).
Selling option premium is not a glamorous or overly involved strategy, but this simple strategy delivers the best results (when done correctly).
David Jaffee teaches his students to create a watchlist of stocks and focus their attention on being disciplined.
Traders who sell options are known as writers, and they collect premium when someone buys the option they sell.
For example, if you sell a call option, you hope for the option to expire worthless. However, regardless of whether the call is exercised by the buyer or not, you keep the premium.
Premiums may seem like small amounts, especially in comparison with riskier strategies, but they add up over time and your win rate can be very high.
Additionally, selling options is easy to understand.
Let’s say that Amazon is trading at $3,500. You can agree to buy Amazon at $2,900 and collect $5 per share (or $500 per contract) for agreeing to buy Amazon at a price that is $600 below its current market price!
Which option trading strategy maximizes profits?
Selling options may not be a quick way to get rich, but it is a reliable options trading strategy with a high probability of profit.
If you are starting out with a larger account, you have the potential to earn larger profits.
However, if you are starting with a smaller account, you can still earn profits a little bit at a time.
Selling options is an effective strategy because you can win up to 98% of your trades.
This high win rate provides consistency, and little wins compound greatly with patience and dedication.
Option Trading Strategy to Manage Risk
While selling options is the best option trading strategy, it requires a great deal of discipline.
Winning the majority of your trades makes it easy to start trading too large, which can lead to significant losses.
It can also cause traders to start trading too often, increasing their risk.
If you choose to sell options, you have to properly manage your risk.
Practicing patience by making only a few smart trades per week is crucial to success.
One risk when selling options is that even if you win ~98% of your trades, you can actually still lose money, overall, if you get caught in a violent recession like March 2020.
The reason is that options are leveraged instruments, and options usually permit 2.5x to 5x as much leverage as stocks. As a result, if option traders trade too large, then they can easily be forced into a margin call if they trade too large.
David Jaffee encourages his students to make wise decisions by focusing on their watchlist of stocks while also being disciplined and patient so that traders do not force trades.
Instead of being influenced by the latest news or industry trends, becoming a successful options trader requires constant discipline.
Start Learning the Best Option Trading Strategy
If you want to learn how to sell options, David Jaffee’s online options trading course is a must.
With a comprehensive overview of option trading strategies, you can make wise trading decisions and maximize your profits.
Visit BestStockStrategy.com today to enroll in David Jaffee’s options trading course.