Expiration Day Strategies
Someone sent me an interesting video yesterday regarding a weekly options trading strategy called a strike force – or strike force trade – which is a variation on a ratio spread trade that can be used at or near options expiration using weekly options. Coming up we’ll get more into this type of trade and exactly how it works (or just join our free options income trading members site by CLICKING HERE ) – and we’ll also get into how to correctly place and manage these types of trades along with other easy to implement ‘expiration day type’ plays such as calendar spreads, broken wing butterflies, 1 day iron condors, iron butterflies, straddles, pinning and more. To learn more join our free options income trading newsletter / members site by CLICKING HERE
Weekly Options Strategy
Even though the name of this weekly options strategy might cause one to think of this trade as a ‘bullish only’ position – a bull spread options trade can actually be used if you think the market is going to be heading up or going down – or even if you feel the options trading market will won’t be moving much at all.
Options Trading Strategy with Defined Risk
What is nice about this trading strategy is that it is a defined risk trade – which means that you can manage your position – control your risk – without having to set up stop orders that are contingent on if and where the underlying hits a certain price (or position loss) point – or – without having to sit in front of your computer screen all day watching every tick of the market in order to make a stop loss exit on this option spread position manually.
This is because one of the options in this position cuts the trade off at whatever option strike it is placed at.
For example – here is a bull call spread on XYZ which is trading at 67.50:
Buy 1 65 call strike
Sell 1 70 call strike
If the market drops below the 65 call strike price while this weekly options position is on, the trader can only lose a limited amount – which is the amount that has been ‘capped’ by the long 65 call.
What helps to make this attractive to weekly options traders as far as risk management goes is that many newer traders have a difficult time managing their risk in option trades. They aren’t able to properly calculate exactly where to set stops – or they aren’t able to correctly set up what can be complicated contingent order set ups. Or, they may get stopped out and become frustrated – or even worse – not even set up stops or a risk management plan at all on their option trades.
By creating an easy to implement options trade like the bull spread strategy – the traders risk management is already built into the trade so there is no additional and/or complicated steps necessary to make sure your weekly options trading losses don’t get out of control.
To learn more about these types of option spread strategies – unique ways to trade them using regular dated and weekly options – along with many other unique option income trading strategies be sure to join our free option income trading newsletter by going here