Options Trading Education – Low Risk Trading Strategies by San Jose Options
San Jose Options is the leader in Options Mentoring. Get your Options Education with us, and you will learn faster through our apprenticeship teaching method.
We are the preferred options course for risk-averse, sophisticated options traders worldwide. We don't mind home run trades every now and then? Who would? However, our bread and butter is found in safer trades that consistently make us money while mitigating most to all risk. At this level, you get the peace of mind that your portfolio will survive any market condition, especially the volatile one that we live in today.
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San Jose Options is the leader in Options Mentoring. Get your Options Education with us, and you will learn faster through our apprenticeship teaching method. We Trade. You Learn.
Hi everybody! Welcome to this presentation by San Jose Options. We’re an options mentoring program located in San Jose, California and we teach online so no matter where you live, as long as you have internet, you can attend our classes. This is going to be a short demonstration on one of the strategies that we’re using to combat this highly volatile market. I’ll just give you some snapshots to show you how this month had a couple of trades that worked out really well and give you some insight to our low draw down strategies and ways you can prevent your portfolio in this highly volatile market. Go ahead and get started here and welcome to our video.
What I’ve drawn here is this. The white line here is our zero line, so if you’re familiar with risk graphs, you probably understand already but if you’re new, then this white line will be our zero line. Anything above that would be profit and anything below would be a loss at expiration. This yellow line here is our expiration graph. This is a type of trade, a spread, that we have been using during this volatile market because on the left side here, which would be the downside of the trade meaning that if the underlying symbol goes down, then, you have protection to the downside. You can set these trades up where you might breakeven on the downside, maybe lose 5% max, 2% max, 1% and so on. Like in this graph here, we might be risking maybe a hundred dollars or two hundred dollars and it doesn’t matter how far the underlying symbol might go down to the downside, that’s the most that we could lose. Now, however, if we do go to the upside, you could actually have some profits, $2,000, $3,000, $4,000 and so on. Since the market is moving around so much, we’ve been finding that this strategy has been working pretty well for us because we have our risk management built in with a chance of making some pretty good returns but we don’t have to worry about losing 10, 20, 30% on any of our trades.
To reiterate what I was explaining, on the downside here, you could set-up some of these trades where your maximum loss, let’s say, could be limited to something like $200. Over here, we can actually have a maximum profit of, say, 4,000. Now, I’m not saying that the odds, the probabilities of this trade, if you’re making 4,000 are going to be extremely high. But the probability of you not losing more than, say, 2% on the trade is very high. The idea of this kind of trade is that you have your risk management in place with a chance to make some pretty decent returns but in this type of market, we need to think about safety first. This is a type of trading to do that will protect your portfolio.
Now, let me show you something else about this trade. This blue line that I’ve drawn here illustrates how this trade could actually develop and show a profit over time. If you’re just in this trade for, say, a week or 2 weeks and your underlying symbol starts going this way to the upside, you can actually realize a profit in this area right here. You don’t have to get to expiration. You don’t have to get to the peak of this triangle over here. We can actually make a profit here, you can make a profit here, profit here, profit here. In some cases, you can actually make a profit in this area over here. We’ve had many trades where, actually in this area here too, you could actually make 5%, 10% or so and so on. But as you get closer to the apex of this triangle over here, you actually have a chance to make some pretty nice returns.
Here now, we have, I think this one account in here’s an actual, real trade that we did this month. I just wanted to illustrate a couple of things with a real account. Here’s an actual, real graph at expiration. This actually just expired Friday and actually expired. You can see right here, which bring us to the point up here on our profit chart. This trade actually made over $2,000 like I was explaining. Here we have a plus $2,000 trade where we were risking over here, we were risking $225 on that trade. We had a numbers management if this underlying symbol has gone down this direction to the downside, then, all we had to risk was $225. Fortunately, this trade worked out well, expired right here at about 01/05, made $2,000. If they had expired up here, it would’ve been much higher. But again, that would be just pretty low probability to end up way over here but we do have a pretty good range as you see; 100 to almost 120 to where we were going to end up over her.
The other thing I want to point out is, look at the probability on this. It’s actually a very high probability that you can either make something or you’re going to lose very little. These trades can actually start with the software. They actually show you about 100% probability that you’re either going to lose very little and you can set these up, maybe 1 or 2% loss, maximum maybe up to 5% but you can have returns like this. It’s a pretty phenomenal strategy and this is mainly one of the strategies that we use in this crazy market and I’ll teach you all the ins and outs of it and that’s about what I really wanted to show you, I guess on this one.
Back to the chalk board, one other thing I wanted to show you before we got going here were you can also do this set-up on either side. If you’re in a position and you just maintain this center area to expiration, you can set these up and sometimes you have a credit here or like I said risk 1-2%, maybe 5% max. However, if you end up anywhere near these areas or even start approaching them, let me show you what I mean. These are called like day step lines. Your day step lines will actually inflate and you can actually realize a profit if the market just goes either directions a little bit. That’s what’s happening constantly in this market that we’re seeing now, again, just a phenomenal strategy for this highly volatile market. You have your risk management in place all the time and it’s just one thing that we focus on in our course and it’s pretty much proprietary. Out of all the questions I have taken, I haven’t seen this thought anywhere else. It might have been working hard on myself and we’ve been working hard on it together to in our courses all the students.
Anyway, once again, thank you very much for watching our video! Please give us a visit at sjoptions.com and once again, we’re San Jose Options Mentoring program from San Jose, California. Thank you so much and have a great day!