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Trading is stressful, and life as a full time trader is pretty demanding.

The hours are long, the pressure is intense, and you risk your own hard earned money with every trade you place.

But what if I told you that it doesn’t have to be that way?  And I’ve been asked over and over, How is it possible to make huge profits with less pressure?

Believe it or not, it’s actually possible to return consistent profits without the stress and headache of a typical day trader.

And by using this strategy you can make steady profits in nearly any market condition!

So how do I do it?

I answered these three questions – and so should you….

  • Do I want to make money or spend money?
  • How often do I want to have a winning trade?
  • Is my trading a business or a hobby?

Now for me, I  want to make money instead of spend money, have the odds of winning in my favor like a casino, and focus on growing my assets as a business.

And successful traders typically have a well defined edge in the markets –  and I knew I had to have the same for myself…

 

Options Profit Planner

 

Every business starts with an edge in the markets

And no matter how small this edge is, it is well defined and precisely executed to generate maximum returns for the business.

The same goes for trading… you need to define your edge and execute it flawlessly to generate income for your account.

By using this strategy, you can give yourself that edge you are looking for to land consistent profits using credit spreads

The Options Profit Planner system is broken down into 3 parts:

  • The Scanner to locate stocks to trade
  • A Credit Strategy to put the odds of the casino in my favor
  • Fractal Energy to determine the energy of the stock

 

The Scanner

 

The scanner aims to separate the good from the bad stock…

So when I trade a stock, I want to feel comfortable owning it for a long period of time in the event an options trade goes wrong.

And to protect my asset, I only want to trade certain spreads on high quality stock that I feel turning into a longer-term investment.

In order to locate these stocks, I turn to FinViz to get this information.

With thousands of stocks to trade each day, it’s easy to become overwhelmed with selecting what to actually put your money into.

But you won’t stand a chance against the other sharks of Wall St.  if you just pick random stocks to buy…

The key to being successful is having a way to filter down to a handful of stocks to trade without having to search for hours each day.

So the first step I take is with by looking at my scanner in Finviz

 

Source: Finviz.com

And this scanner is absolutely free for you to use so you don’t have to worry about any expensive subscriptions to pay for access!

With this free software platform you can control things such as average volume, stocks or ETFs, price, and fundamental ratios.

 

Credit Spreads

 

As an options trader, I don’t want to go to the casino…

Instead, I want to BE the casino!

And I do this by trading credit spreads instead of debit spreads.

Option sellers take maximum advantage of the option time decay theory, commonly known as Theta Decay.

OTM options lose value quickly and become worthless at expiration.  

This allows traders to not have to worry about correctly predicting the market direction or timing the market perfectly to generate income.

Now what do one of these strategies look like?

 

 

I know this might look scary, but it’s a lot more simple that you might think.

In order to create this strategy, you would want to sell a higher valued put, and buy the lower valued put as protection.

What does this give you?

It allows you to collect a net credit on the trade, which is the difference between the two puts.

But why do I like this trade?

Well, when you properly select your strikes, you can generate odds of winning that mimic the likes of a casino.

Plus when you generate income from collecting premium, you can steadily return close to 100% returns each and every trade.

Remember traders, there are many ways to make money in this market and selling options is one of my absolute favorite go-to strategies.  

Key Points:

And you see, when it comes to placing a trade, you need these 4 things

  • To have the stock selected
  • A price range identified
  • An indicator to show you strength of the stock
  • And an options strategy to tie it all together.

 

Fractal Energy

 

As a trader, spending hours going through stock charts and looking for patterns is just part of the day in the life of a professional trader.

To cut down the work that I have to do every day, I only focus on stocks that meet qualifications set by the Fractal Energy Indicator.

When looking to understand what price action is doing you need to reference information other than a basic stock chart to get a true edge in the markets.

And by having an indicator such as the Fractal Energy indicator you can determine stocks that are charged to run or exhausted and ready to stall out.

But first – What are fractals?

The power of fractals allows me to determine the strength of trends and how much “life” is remaining in a stock’s movement.  

There are 2 main components of Fractal Energy:

  1. Markets Fractal Pattern
  2. The Internal Energy

By combining those two different components you create a single indicator that is able to successfully determine the strength or weakness of a trend on any market or stock.

Here are two examples of the Fractal Energy impacting one of the largest markets and most well-known stocks out there.

The SPY:

 

Source: Thinkorswim

 

Wrapping Up

 

If anyone says trading is simple, you need to question what they are telling you.

I know this market is crazy… and even overwhelming to many.  

But you need to trust the tools you use in order to trade it safely.  

And three of those tools are the Stock Screener, Credit Spreads, and Fractal Energy indicator.

Once they are combined, these three tools are some of the best a trader can deploy in almost any market condition.

When looking at these strategies combined, this really is where statistics and probability really shine and make for a highly profitable trading opportunity.

Not only do I trade using an indicator that tells me 95% of the time price will stay inside a range, I also combine it with an options strategy that can pay me 100% ROI on my trade if timed correctly to the markets.

So… to recap what makes this trade a really high probability winner.

  1. You can never scan for all of your stocks to trade.  You need to use a tool such as Finviz to help narrow the field down to something you can trade.
  2. Trading credit spreads can pay me 100% returns, which cannot be done when buying calls or even the stock outright.
  3. Using Fractal Energy to tell me when stocks are going to be charged or charging to determine what is coming up for the stock

Click here to learn how I use the Fractal Energy to determine what stock is ready to explode

Author: Dave Lukas

Many times when traders first start out in the markets, they only buy options on stocks they are familiar with.

If you were to ask what stocks were traded, AAPL, TSLA, NFLX or any prime time news station stock would come up first.

And what has always boggled my mind is that people really believe that the news station stock pickers are out to help them!

There are MILLIONS of people watching these news stations, and by time you blink, the stock or option has already made its move!

And this is not a way to trade with an edge…

Instead, if you want to stand apart from the rest, you need a strategy that stands alone and has stood the test of time trading throughout one of the worst markets ever seen.*

And this strategy actually searches for stocks to trade and puts the odds of the casinos to work for you.

 

Options Profit Planner

 

Options Profit Planner is a revolutionary options trading strategy that is designed to search and locate trades and put the odds of the casino in your favor.

This is done by a proprietary trade searching algorithm that hunts down and locates trades to focus on and credit spread trading to achieve 70%+ odds of winning with the possibility of 100% returns on each trade.*

But what is this built on?

Well, this strategy is built around 3 main concepts: technical and fundamental research, credits spread strategies, and fractal energy.

Now… let’s look at how each of these will take your trading up a notch and improve the chances of landing consistent profits.

 

Fundamental Research

 

With thousands of stocks to trade each day, it’s easy to become overwhelmed with selecting what to actually put your money into.

But you won’t stand a chance against the other sharks of Wall St.  if you just pick random stocks to buy…

The key to being successful is having a way to filter down to a handful of stocks to trade without having to search for hours each day.

So the first step I take is with by looking at my scanner in Finviz

 

Source: Finviz.com

 

And this scanner is absolutely free for you to use so you don’t have to worry about any expensive subscriptions to pay for access!

With this free software platform you can control things such as average volume, stocks or ETFs, price, and fundamental ratios.

Then the next step is to browse through this small list of stocks and see if any one of them fit my favorite patterns .

And when looking at the stocks, I always use these next two indicators to determine what I am going to be trading…

 

Bollinger Bands

 

Bollinger Bands were developed by John Bollinger as a price envelope designed to define the upper and lower price range levels of a stock.  

Bollinger Band Indicator consists of a middle SMA along with an upper and lower offset band.  

And because the distance between the bands is based on statistics, such as a standard deviation, they adjust to volatility swings in the underlying price.

Bollinger Bands help to determine whether prices are high or low on a relative basis, and according to these calculations, price should fall within range 95% of the time!

Let’s take a look at an example chart.

 

Source: Thinkorswim

 

How do you read the Bollinger Bands?

The Bollinger Bands consist of three lines as follows:

The Middle (Basis) Bollinger Band – This is a simple moving average of price, usually set to a 20-day timeframe, although that is a variable that can be adjusted any time.

The Upper Bollinger Band – This line takes the 20-day simple moving average of the Middle Band, and then adds 2 standard deviations of that value.

The Lower Bollinger Band – This line takes the 20-day simple moving average of the Middle Band, and then subtracts 2 standard deviations of that value.

So what is the importance of Bollinger Bands, anyways?

By using Bollinger Bands, you can identify reversals as well as trend breakouts very clearly, but how do we use that information in practice?

 

Credit Spreads

 

As an options trader, I don’t want to go to the casino…

Instead, I want to BE the casino!

And I do this by trading credit spreads instead of debit spreads.

Option sellers take maximum advantage of the option time decay theory, commonly known as Theta Decay.

OTM options lose value quickly and become worthless at expiration.  

This allows traders to not have to worry about correctly predicting the market direction or timing the market perfectly to generate income.

Now what do one of these strategies look like?

 

 

 

 

I know this might look scary, but it’s a lot more simple that you might think.

In order to create this strategy, you would want to sell a higher valued put, and buy the lower valued put as protection.

What does this give you?

It allows you to collect a net credit on the trade, which is the difference between the two puts.

But why do I like this trade?

Well, when you properly select your strikes, you can generate odds of winning that mimic the likes of a casino.

Plus when you generate income from collecting premium, you can steadily return close to 100% returns each and every trade.

Remember traders, there are many ways to make money in this market and selling options is one of my absolute favorite go-to strategies.  

Key Points:

And you see, when it comes to placing a trade, you need these 4 things

  • To have the stock selected
  • A price range identified
  • An indicator to show you strength of the stock
  • And an options strategy to tie it all together.  

Fractal Energy

 

As a trader, spending hours going through stock charts and looking for patterns is just part of the day in the life of a professional trader.

To cut down the work that I have to do every day, I only focus on stocks that meet qualifications set by the Fractal Energy Indicator.

When looking to understand what price action is doing you need to reference information other than a basic stock chart to get a true edge in the markets.

And by having an indicator such as the Fractal Energy indicator you can determine stocks that are charged to run or exhausted and ready to stall out.

But first – What are fractals?

The power of fractals allows me to determine the strength of trends and how much “life” is remaining in a stock’s movement.  

There are 2 main components of Fractal Energy:

  1. Markets Fractal Pattern
  2. The Internal Energy

By combining those two different components you create a single indicator that is able to successfully determine the strength or weakness of a trend on any market or stock.

Here are two examples of the Fractal Energy impacting one of the largest markets and most well-known stocks out there.

The SPY:

 

Source: Thinkorswim

AAPL:

Source: Thinkorswim

 

Now let’s talk about how I put it all together to find the trades for the week ahead.

 

Putting it all together

 

I know this market is crazy… and even overwhelming to many.  

But you need to trust the tools you use in order to trade it safely.  

And two of those tools are the Bollinger Bands, Fractal Energy, and Credit Spreads. 

Once they are combined, these indicators are some of the best tools a trader can deploy in markets that are unpredictable.  

When looking at these strategies combined, this really is where statistics and probability really shine and make for a highly profitable trading opportunity.

Not only do I trade using an indicator that tells me 95% of the time price will stay inside a range, I also combine it with an options strategy that can pay me 100% ROI on my trade if timed correctly to the markets.

So… to recap what makes this trade a really high probability winner.

  1. The Options sellers always have statistical advantages over buyers.  That’s a built-in feature for the entire options market, regardless of calls or puts.
  2. Trading credit spreads can pay me 100% returns, which cannot be done when buying calls or even the stock outright.
  3. Using Fractal Energy to tell me when stocks are going to be charged or charging to determine what is coming up for the stock

Click here to learn how I use the Bollinger Bands weekly to determine the market direction

Author: Dave Lukas

Many option traders are just taking bets on volatility when they are buying calls and puts.

It’s a common mistake that many traders make when buying options for directional trading, but these strategies just get eaten alive by time decay, or theta and implied volatility.  [The two main pricing components of an option].

And the strategy that removes the impacts of volatility on buying options is actually selling options.

There are four of the best options income generating strategies that I use, designed to take advantage of these pitfalls

Are you tired of losing money while stocks go sideways?

These strategies are designed to generate profits even in sideways markets.

If correctly used, any of these four option income strategies can provide your trading portfolio with high probability trades almost every time.

And it’s one of my favorite strategies for high volatility market environments like we are in now…

 

Credit Strategies


A credit spread option is when a trader takes two or more options and together, sells the total premium they produce to generate income. 

Now I know this may sound confusing, but let me explain the concept of how to write an options contract.

Instead of buying puts or calls, you will actually want to trade 2 more more contracts for a net credit.

So, if you were to take a bullish bet on the markets, you could either buy a call, or sell a put spread.

A credit spread involves selling a high-premium option while purchasing a low-premium option in the same stock and option type.

What are my four favorite credit trading strategies?

Favorite short credit strategies:

  • Covered Calls
  • Credit Spreads
  • Iron Condors Spreads
  • Credit Puts

Let’s take a look at how each one of these can generate you different types of returns on your trades.

 

Credit Spreads


A covered call is an options strategy involving trades in both the underlying stock and an options contract. 

The trader buys or owns the underlying stock or asset. 

They will then sell call options (the right to purchase the underlying asset, or shares of it) and then wait for the options contract to be exercised or to expire. 

For a covered call, the call that is sold is typically out of the money (OTM), when an option’s strike price is higher than the market price of the underlying asset. 

This allows for profit to be made on both the option contract sale and the stock if the stock price stays below the strike price of the option.

How to create a Covered Call:

  • Purchase stock in lots of 100
  • Sell 1 OTM option contract for every 100 shares owned
  • Wait for call to expire worthless

Here is a sample risk profile of this trade 

 

 

As you can see, by selling an OTM option, you are actually able to generate income on your trade if you are expecting a stock to stay in a range over the life of the option.

And this strategy looks a lot like a credit put strategy many traders use.

But what if you don’t like the idea that you could have a substantial possible loss if the stock dropped?

Well, that’s where a Credit spread strategy would come into action.

 

The Credit Spread Strategy


Let’s take for example, you wanted to go long the markets and use put credit spreads, you would want to sell a higher premium put contract, and buy a lower premium put contract for protection to the downside.

And in order to do this with the SPY trading at $330, you would need to sell a $310 put at $5.00 and buy a lower $300 put at $2.00

In other words:

 

Sell : SPY 20 Nov 20 $310 Put @ $5.00
Buy : SPY 20 Nov 20 $300 Put @ $2.00

 

Simultaneously, I am buying an out of the money (OTM) put option and writing (selling) an OTM put option with a higher strike. Since the higher strike is closer to being in the money (ITM) it sells for more money. Combining these trades I collect a credit of 3.00 (or $300). The option I am selling would bring in a credit of $500 but I have to use the credit to pay the $200 for the second option.

Since you are simultaneously buying and selling two Out of the Money (OTM) contracts, this might sound strange at first.  

Take a look at the risk profile of this trade.

 

Source: Thinkorswim

 

The risk parameters of this trade are

Max Profit : $300

Max Loss : $700

Breakeven : $307

The graph above does a good job of visualizing the trade.  The x-axis is the price of the SPY on expiration.  The y-axis is the profit based on the possible outcomes of the final SPY price.

As a reminder, option pricing is the price of one share, but every contract is quoted in a multiple of 100 shares.  So when the price of the option says $3.00, it means that you will actually collect $300 per single trade.

 

Wrapping Up


Now, do you see the power of trading a credit spread instead of a debit spread?  

I hope so!

There are many benefits of trading this type of strategy, like the ability to generate steady income, trading with the odds like a casino in your favor,  and making money if the markets go up, down, or sideways.

Personally, I find this strategy so liberating and stress-free to not have to constantly worry about the direction of the markets every time I want to trade.  

And when trading credit spreads, you often can build a strategy where you can only lose in the case of a drastic or extremely large move in the underlying stock price.  

So, are you ready to take the leap and start generating a second income for yourself in as little as 1 month?

Click here to join the Options Profit Planner today

Author: Dave Lukas