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How to Make Money Trading Stock Options - Naked Puts & Calls (Strategy Tutorial) - YouTube
Channel: BestStockStrategy
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How to make money trading options with
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naked options this is David Jaffee from
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BestStockStrategy.com my goal in this
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university worked as an investment
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banker on Wall Street for around five
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years have been trading for over 20
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years and I probably completed as an
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investment banker around $5 billion or $10 billion
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very fanatical about constant
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improvement so my goal is I know that
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you experience a lot of videos with fake
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gurus and people telling you that you
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can make money by memorizing three chart
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patterns and engage in technical
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analysis and forex and penny stocks and
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Futures Trading all that stuff doesn't
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work. If I traded any of those
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things regardless of how much I studied
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I would lose all my money so hopefully
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you're not engaged in that and hopefully
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you are interested in learning how to
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trade options and you also realize that
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the only way that you can make
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consistent money in the stock market is
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by selling options and that's where I
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think we differ there's a few people who
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I don't really have much respect for
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like Jason Brown and so he sells his
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program he always tells people to buy
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call options that's complete BS yeah
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occasionally maybe one or two out of ten
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times you're gonna have 300% return but
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the reality is you're gonna lose all
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your money and lose all that premium
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than you paid around seven or eight
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times out of ten so if you're gonna lose
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your money seven to 80 percent of the
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options and I really only sell naked put
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options the reason is that naked put
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options give you a substantial amount of
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protection one you collect the most
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amount of premium to your inherently
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protected by the buying power reductions
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with put options from trading too many
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contracts and three in the worst case
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scenario with a position ends up getting
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challenging it is incredibly easy to
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roll and manage that position the other
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alternative is for you to create
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vertical credit spreads I do not like
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vertical credit spreads at all mostly
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because people are inherently greedy so
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instead of trying to discipline the
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greed out of your body and out of your
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DNA it's much easier just to avoid being
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and placing yourself in situations where
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you will have a propensity to be greedy
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and I can tell you that if you trade
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vertical credit spreads and you have a
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very minor buying power reduction it's
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going to motivate you to sell a lot more
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contracts so let's say you would sell a
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put on face book at 1:58 and then you
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would buy a 150-foot so that's a
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vertical credit spread you have eight
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dollars of risk but let's say on a naked
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position you would sell two contracts
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and in a vertical credit spread you
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would sell 20 contracts I've seen this
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happen and then what happens at face
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book falls down to 155 it's in that
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no-man's land instead you would get a
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signed if you don't roll that position
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for those 20 contracts so you would have
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2,000 contracts of facebook and then
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because your account size might not be
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large enough to assume those 2,000
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shares those 2,000 shares of Facebook
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you would have to close out that
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position for a loss instead you're way
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better off just selling a naked position
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maximizing the amount of premium that
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you receive and in the worst case
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scenario or Facebook drops like 153 you
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can easily roll that position for it and
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you don't have an anchor and a drag
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that's attached to you where you
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constantly have to buy in and out of the
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money put and spend and waste your
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premium so we always like naked
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positions I make
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probably 90% of my money by selling
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naked put options let me give you an
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example of how to make money
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alright let's say you have an account
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size you should only trade market
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leaders all right so you're only gonna
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trade Facebook Amazon Boeing Lockheed
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Martin a bank GS and let's say like a
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gaming sub like a TVR alright in this
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example you pretty much have four
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trade and have positions on around five
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or six stocks at every time if you have
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any count size that's below 100,000 you
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should have a maximum of two positions
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on that's it
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choose like Facebook and PayPal Facebook
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and Amazon or I mean if you want some
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diversification you can trade PayPal and
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Goldman Sachs if you have less than
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$10,000 you should treat one position
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that's it keep it super simple then what
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you do is let's use Facebook is an
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example Facebook right now is trading at
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175 all right
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you look at the trading range of where
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it's been over the past three or four
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weeks it has been trading at 180 on the
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high end and the low end around 170 so
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what you do is you would wait for
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Facebook to fall to around 172 then you
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would sell and add the money naked put
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option with a strike of around 158 an
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expiration that's around six weeks in
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the future and you would collect around
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a dollar 20 a share or a hundred and
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twenty dollars per contract the
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probability that you'd be able to keep
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that entire $120 is about 97 98 percent
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really the trick and the reason why
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people don't make money in the stock
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market is they're not disciplined right
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then it just keeps going up I just leave
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it alone if there's no entry point and
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it doesn't fall back within the range
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and re-establish a new trading range and
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trade on the low end I don't enter a
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position so what would happen if
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Facebook traded up to like 180 right
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then what I would do is I would see and
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wait for it to establish consistent
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trading pattern so if three weeks from
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now
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Facebook's a new trading range is let's
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say between 185 and 249 86 187 at a
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maximum of 188 as long as it stays above
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188 then I will not touch it I only make
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any trades and if it falls or if it goes
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let's say it's training range like I
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said before in a month is now 188 to 200
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and trading at 195 I will wait for it to
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fall to 188 and then I will sell a 175
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naked put that's it I mean you just have
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to be disciplined replicate that trade
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try to hit singles and selling naked put
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options is by far your best and
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statistically significant way of making
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consistent profits in the stock market
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This is David Jaffee from BestStockStrategy.com
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BestStockStrategy.com you can get $400 worth of
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if you have any questions leave a
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