Is Options Trading Actually Profitable? The Hard Truth

As a veteran trader, I give you my honest answer to the question: is options trading ACTUALLY profitable? Click SHORE MORE to see the research I cite in this video under the section "STRATEGY OPTIMIZATION" below.

Liked this video? Subscribe! It really helps the channel
https://www.youtube.com/channel/UC7invO3VaFsOoJ9-0QU5Efg?sub_confirmation=1

Tastyworks is hands-down the best brokerage for options traders. They provide cutting edge options research and their trading platform is built specifically for individual options traders like you.
Get 100 shares of stock when you open a new account: https://start.tastyworks.com/#/login?referralCode=VB433SMRQ9

SECTIONS:
0:00 Intro
0:48 Strategy Rundown
2:26 Strategy Optimization
4:00 Real Life Considerations
6:32 Recommendation to You

STRATEGY OVERVIEW:
Options are an insurance policy against price volatility. By purchasing options, you are given the right to buy or sell a stock at an agreed upon price, regardless of where the actual stock price is.

This ability to lock in prices gives investors peace of mind. Naturally, during times of high volatility, peace of mind is what people desire. Therefore, during times of high volatility, demand for options increases - and so does the price of options according to natural supply and demand.

This strategy takes the other side of the trade by selling options to people who want them with the promise that they can use them if they need it, very much like selling insurance. But for you as the insurer, you’re hoping that they don’t get to use it so that you can pocket the money you got from selling the insurance.

This is a unique trading strategy in that it doesn’t speculate on going long or short the market, but rather on taking advantage of when options trade for a high premium during volatile times

STRATEGY OPTIMIZATION:
1. Deploy no more than 30-40% of your trading capital at any given time to make sure that you always have enough money to meet potential margin requirements and adapt to changing market conditions https://www.tastytrade.com/tt/shows/market-measures/episodes/importance-of-capital-allocation-09-04-2019

2. Diversify across asset classes that aren’t correlated to spread out your risk https://www.tastytrade.com/tt/shows/market-measures/episodes/correlations-in-selloffs-11-27-2019

3. Keep each position small so that one bad trade doesn’t blow up your account https://www.tastytrade.com/tt/shows/market-measures/episodes/position-sizing-defined-risk-09-10-2015

4. Look to sell options during times of high implied volatility. This is because once the market normalizes, the option prices decrease dramatically and you’re able to buy them back for a larger profit https://www.tastytrade.com/tt/shows/market-measures/episodes/high-iv-advantage-11-26-2019

5. Selling options that have 45 days left before the option expiration date is a good balance between time in market and premium collected.
https://luckboxmagazine.com/techniques/the-magic-of-45-optimal-short-options-trade-duration/

6. Closing positions either 21 days before option expiration or at 50% of max profit potential minimizes risk that usually occurs during the latter half of the trade
https://www.tastytrade.com/tt/shows/market-measures/episodes/ways-of-managing-trades-05-09-2019

7. Maintaining a slight short bias in your portfolio helps accommodate for severe price movements that tend to happen to the downside
https://www.tastytrade.com/tt/shows/market-measures/episodes/optimal-short-deltas-03-02-2020

REAL LIFE CONSIDERATIONS:
Unlike the emotionless computer conducting trades no matter what, you are subject to emotional flaws during times of panic, and you are likely to make rash decisions that are counterproductive, which can cause real-life results to differ greatly from research.

This is exactly what happened to me during market crashes. Despite my years of experience, I just couldn’t help but panic, stress, and overreact...because I’m still a human being!

And despite all that effort and sleepless nights, I wasn't able to beat the S&P500 throughout the trading career...

RECOMMENDATIONS TO YOU:
*I'm not a registered financial advisor. All investments have risks. Proceed with caution*
Options trading can be profitable if
1. You consistently the trade mechanics at all times
2. You have lots of back-up capital to deploy

However,
If you get easily scared or frustrated, forget it
If you are a small-time trader, forget it

In a way, options trading is for people who are already winning - meaning they have their mental game together and already have a lot of money to deploy. Even better, it’s for people who have the resources to program a computer to do it for them.

My Other Channels
Facebook: http://www.Facebook.com/JettGunther
Instagram: http://www.Instagram.com/JettanaGunther
Twitter: http://www.Twitter.com/JettGunther

#optionstrading #tradingstrategy