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Options Trading Strategies for Beginners: Always Trade NAKED Options - YouTube
Channel: BestStockStrategy
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Options trading strategies for beginners. Why you should always trade naked
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reasons why you should always choose to
trade making options. I have heard
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numerous times from people that trading
naked options is very risky and it's
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like picking up nickels in front of a
bulldozer. That's just a complete
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misrepresentation and a lack of
understanding on how trading options and
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options is dangerous are not profitable
traders. They're not. So what I can tell
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you is there are three main advantages
of why you should always trade naked
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options the first is that when you trade
options which is the only way and the
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best way for you to be a consistently
profitable trader because it turns you
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into the casino and not the gambler
remember the only way to be a
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consistently profitable trader and to
have a positive probability of profit is
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to sell option premium and turn yourself
in to the casino and not be a gambler
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and not try to guess prices but the
three reasons why is that when you sell
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option premium you are maximizing the
amount of credit that you're receiving
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the second reason is that it is much
easier in the 5 out of 100 instances
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that that position is going to be
challenged you are increasing the
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likelihood that you can easily manage
and roll that position forward because
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you're not spending money on the lower
price put option which is essentially a
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throw away in a garbage option and the
third reason is that by selling a naked
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option it reduces your buying power so
it inherently protects you against the
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human desire to be greedy and to
maximize all of their profits and to
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maximize their gains which actually
comes back and bites people in the ass
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and that's why they end up losing a lot
of money if I've seen people who they
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should they can only trade two contracts
of Facebook on a naked basis
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and then they end up trading 20 vertical
credit spreads and let's say they would
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treat the 158 put of Facebook on a naked
basis and then they would trade you know
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20 with a vertical credit spread and a
strike price of 158 and then they would
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buy the $150 and then what happens is
Facebook 5 out of 100 times will trade
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at 154 so it's in that no-man's land and
then because they don't have a large
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enough account size to take ownership of
that position and they also are limited
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in their flexibility to manage that
position because they can't buy the hype
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the overpriced put option to maintain
the integrity of that vertical credit
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spread then their broker ends up closing
out that position for an enormous loss
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stock and trading vertical credit
spreads for three reasons it maximizes
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the amount of premium that you receive
because you don't have to buy the lower
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price insurance it substantially
increases the flexibility that you have
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in managing the position and also it
inherently protects you against greed
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because it reduces your buying power to
an extent where you can't trade too many
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contracts when you trade vertical credit
spreads you can trade 20 contracts on
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Facebook whereas if you were trading
naked you could only trade two and that
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five out of a hundred times gets people
in trouble when they trade too many
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contracts but when you trade naked
options you're protected this is David
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Jaffee from BestStockStrategy.com you can
go to BestStockStrategy.com and enter in your email
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and receive $400 worth of free training
please like comment share and subscribe
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to this video if you have any questions
leave a comment below I answer every
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single question and I'm just here to be
of service and to help you so if you
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have any questions let me know I'm sorry
for the baby crying and screaming in the
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background I can't really do anything
about it but I'm here to be of service
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