With puts and calls there is a little known option trading strategy that can provide consistent profits from markets that seem too wild and choppy to use the usual strategies like iron condors, calendars, and credit spreads. This strategy works best in crazy markets unlike the standard option income strategies such as the iron condor, the calendar spread, credit spread, etc.
This strategy is initially set up to profit no matter what the market winds up doing. The set up for this trade can profit regardless of what the stock or index being used winds up doing – if it moves up, a gain is made – If it moves down, a gain is made – and then, when a profit has been realized, the trader can immediately lock in that profit and ‘re-set’ the position so that it will profit again regardless what happens from that point forward.
Similar to a straddle, when using this strategy, we don’t care what the market ends up doing. Up or down, it doesn’t matter. If the market goes up – that’s great. If it goes down – that’s great too. And the bigger the moves, the better.
Then, when a move has occurred and a profit has been realized in the position, using an easy to follow set of rules, the trader can perform an adjustment that immediately lock in that profit while setting up the position to profit again no matter what the underlying winds up doing. And this can be done over and over again – continually scalping profits out of the trade.
One of the most frustrating things to directional traders is when a trade actually goes in their direction, making them profit, only to immediately revers and go the other way, wiping out their gains, and perhaps even then dipping lower putting them into losses.
Gamma Scalping eliminates this. And once again, using the method used to lock that profit in, positions the trade back to it’s starting point – where if the underlying continues moving in the same direction – or stops and returns back to where it came from – MORE profits can continue. And if the underlying continues the move – or heads back to where it started from – MORE profits continue.
Gamma Trading is a great tool to have in the stock and option traders toolbox and especially in extremely volatile times this strategy can be a real asset to help generate super sized profits.
And along with being stress free and profitable – using puts and calls explained in this way is fun too.
To find out more about the butterfly spread trading option strategy, visit this Butterfly Spread Training Site for scads of free training videos, examples, and reports on how to fittingly start off, exit, manage and adjust puts and calls examples Strategies to create a consistent monthly returns.