Weekly options strategies pdf
Profiting from Weekly Options: How to Earn Consistent Income Trading Weekly Option Serials - Seifert - Wiley Online Library
Dan Sheridan has seen the options business from both the institutional and retail sides. After 24 years as a Chicago Board Options Exchange market-maker and another 10 years as a options mentor for private traders, his approach has remained consistent: To be successful, you must treat options as a business.
For those with the consistency and discipline, it becomes a good business. More recently, the practice has had a weekly focus.
Weeklies have been the growth end of the options business. More contracts have come on board, and more volume is being traded.
There are compelling reasons why:. He also points out that some weekly strategies call for the trade to be on only two or three days. The trader is then out of the market two or three days and faces no exposure.
Contrast this with a classic monthly option trader who is taking on 30 to 40 days of market risk. Sheridan is an option seller. He does this in different ways. For example, his favored vehicles include calendar spreads, butterflies and double diagonals--no naked options. He makes money by the decay in the options he sells. These strategies all have one thing in common: They work from faster decay in short options relative to long options.
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Sheridan does this using iron condors. Sheridan is in the market every week, not just for the occasional speculation that may or may not work. Finally, he has predetermined contingency plans for market moves, both up and down. Ideally, at a particular point in time, the beginning of the trade, you are not leaning long or short.
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There are myriad ways to do this, including rolling up or down, adding options, subtracting options, etc. But the goal usually is to put the position back to neutral. This allows for the inevitable zigzags of the market, such as market regression, and maximizes time in the trade, which in turn, allows the magic of theta options decay to accrue.
The concept of adjustments also includes the concept of maximum loss: It is popular among some of his students for its simplicity. Sounds simple enough, but the real world application can be a bit more daunting. For example, while profits can accrue more quickly in weeklies, so can losses. Real Life Success Stories from the Financial Markets. Dan Sheridan can be reached at dan sheridanmentoring.
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