I want to talk about what Maximum Safety and Maximum Reward option trading is all about. It’s been the motto of San Jose Options mentoring program for quite some time now. First of all, let me tell you how this concept came about.
Sadly, this expression was brought about due to having some less than savory experiences from when I first started trading options. Like most options traders, I started with iron condors. I knew a bit about credit spreads but never really traded them. One look at the risk graph and I knew just how risky those could be.
I traded the traditional option spreads that have been traded for decades, but couldn’t help thinking there could be a safer way to trade. I had my winning months, but they were always followed by one rock bottom day. Thousands of dollars I successfully made always managed to find its way out the window from a single large move on the market.
These less than profitable results got me thinking seriously about option trading. There must be a better way to trade! I knew I wouldn’t get anywhere if I kept sustaining these large losses on my trading account. Several small wins being topped off with a big loss doesn’t get you anything.
Maximum Safety, Maximum Reward option trading took birth in my mind years ago. I began testing all of the ideas I could possibly think of. I’ve been doing this for several years now, and I don’t plan to stop anytime soon. What I’ve come to realize is that I need to maximize the Greek called Theta, while minimizing Gamma and Vega. Once I achieved this, then I will have what I am looking for.
Things have been going very well for us and we’ve made some impressive leaps over the last few months. Today we compared a strategy we call “the revolver” to the traditional iron condor. Our strategy got the same amount of Theta as the condor, but the Vega and Gamma were much lower. Even though they had the same Theta on the trade, the iron condor would bring about an $8,000 loss on a 10% move to the upside, while the revolver will only experience a $200 loss from a similar move. In the end, our strategy outperforms the iron condor and is proving itself to be twice as safe if not more.
To conclude I would just like to say that if you really want to find success through trading options, then you really need to focus on Maximum Safety and Maximum Reward. Again, this means that you’ll need to maximize your Theta while minimizing Gamma and Vega. I hope you have found this article to be informative and helpful. Good luck on your option trading, and until next time, have a great day!
Tired of the same-old traditional Option Strategies? Learn cutting edge, low-risk option trades through the San Jose Options mentoring program.
