subject: Consistent Returns With Option Trading [print this page] I am one of many option traders, folks, in search of a magical way of making consistent returns from our trades. I was talking to a fellow trader today who said something profoundly familiar to me.
Something that stood out was when he said "Non-directional option trading doesn't mean we can make money in any direction. It means that we make money if the underlying doesn't move in any direction. In other words, it's still a directional trade, sideways." I couldn't agree more, and it's been advertised that it's easy to make money with options because we can make money on any direction. In some respects this is true, but in others it's not.
Those of you trading the strategy that most courses and books teach know exactly what I'm talking about. The Iron Condor is just as directional as most option trades, only that its direction is sideways. So if you're trading that strategy in 2009, you probably aren't making anything. It's just as hard for some to predict a sideways move as it is an up or down.
In my years of trading, I've received many calls from my fellow traders losing huge chunks of their accounts trading credit spreads and condors. They all spun the same tales of dismay; of how things were going so well for several months, only to suddenly loose nearly their entire account in a single day. It's a sad tale I have heard far too many times.
This is exactly why I don't teach traditional Condors and Credit Spreads. If you are a few days from expiration, and the RUT is right at your short strike, then you are doing it the way most people trade this strategy, and soon you'll be facing the shame of explaining yourself to the spouse! Go ahead, laugh, but it won't seem so funny when it happens to you and your life is in tatters because of this mess of stress you made yourself.
In response to these problems, San Jose Options Mentoring has changed the approach to Iron Condors and Credit Spreads. We've developed new techniques that will allow the underlying more wiggle room, lowering out stress level and keeping us out of those dangerous situations. Remember, the less adjusting you have to do to your condor, the better of you'll be in most cases.
In addition to our safer ways to trade condors, we've also come up with ways to lock-in our profits from them. The average option trader will exit the trade once they've made a profit. San Jose Options can lock-in our profits and we stay in the trade.
We've developed a technique that gives us a free bonus trade if a Condor moves against us. So, even if we experience a bad month once in a while, we still get an excellent, free trade from it.
At the end of the month, win or lose, we at San Jose Options have trading Iron Condors and other strategies down to an art. Trade on, fellow traders!
by: Donald Scott
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