Weekly option trading signals
It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options. Uncovered Options Trading System. What you can expect: One single winning trade could pay for the membership for years to come.
Uncovered options trading involves greater risk than stock trading. You absolutely must make your own decisions before acting on any information obtained from this Website. The return results represented on the web site are based on the premium received for the selling options short and do not reflect margin. It is recommended to contact your broker about margin requirements on uncovered options trading before using any information on this web site.
Use our " Trade Calculator " to recalculate our past performance in relation to the margin requirements, brokerage commissions and other trading related expenses. Past performance is not indicative of future results. In the covered call strategy highlighted above traders are able to collect the rapid time decay by selling the weekly calls against a long stock position. Selling naked puts, in theory put-call parity is equivalent to a buy-write strategy though skew and margin requirements alter the picture a bit.
This is a phenomenal way to take advantage of option leverage and limit decay. Credit spreads are popular because they allow traders to sell upside call spreads or downside put spreads levels with a locked-in risk-reward from the trade outset. Unfortunately without the underlying stock, this weekly call option sale would require a substantial amount of margin within your portfolio, as the maximum potential loss on the trade is theoretically infinite.
However, you can reduce the max potential loss and margin requirement by simply purchasing a higher strike call i. Weekly Options Calendar Spreads: Remember that a calendar spread is a two-legged spread constructed by selling a shorter dated option and buying a longer dated option.
The profit engine is the relatively faster decay of time premium in the shorter dated option. Calendar spreads reliably achieve their maximum profitability at the expiration Friday afternoon of the short leg when price of the underlying is at the strike price. Prior to the recent availability of these weekly options, calendar spreads were typically constructed with around 30 days to expiration in the short leg. Hit and run calendars differ in risk somewhat. Volatility moves rarely occur at anywhere close to the rapid pace of price movement.
Because of this characteristic, the primary risk in these short duration calendars is price of the underlying. The occasional occurrence of spiked volatility in the short option significantly increases the probability of profitability as the elevated volatility decays to zero at expiration. One of the very liquid underlyings that has actively traded options is AMZN. A quick look at the options board showed the weekly strike option, having 4 days of life left and consisting entirely of time extrinsic premium, was trading at a volatility of This situation is called a positive volatility skew and increases the probability of a successful trade.
I continued to monitor the price, knowing that movement beyond the bounds of my range of profitability would necessitate action. By mid day on August 31, 48 hours into the trade, the upper limit of profitability was being approached as shown below:.