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A great way for option traders to generate consistent income in extremely volatile markets is called Gamma Scalping . When the market / underlying instrument is making huge moves and swinging around wildly, this is a strategy that thrives - unlike the traditional monthly income strategies such as iron condors, calendars, credit spreads, etc.
One way to think of gamma scalping is to compare it to day trading - where the trader is looking to capture profits from quick little moves - however the difference here is that due to this strategy set up - most of the risk that is normally associated with day trading has been removed. 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.
If the market goes up - that's great. If it goes down - that's great too. When utilizing this trade, it doesn't matter what the market winds up doing. We just want it to move. And moves that are bigger make it 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.
How many times have you purchased a stock or option and wound up actually being right and seeing some profits - only to have the underlying immediately turn around and retreat back to it's starting position wiping out all the profits?
Once a gain is showing on the trade - through gamma scalping you can lock that in. And once again, 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.
For option income traders who are struggling in these especially volatile times trying to use the standard income trades like condors, credit spreads, and calendars, Gamma Trading is a good method to learn and consider using and adding to their collection of other option strategies.
And along with being stress free and profitable - it's fun too.
One way to think of gamma scalping is to compare it to day trading - where the trader is looking to capture profits from quick little moves - however the difference here is that due to this strategy set up - most of the risk that is normally associated with day trading has been removed. 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.
If the market goes up - that's great. If it goes down - that's great too. When utilizing this trade, it doesn't matter what the market winds up doing. We just want it to move. And moves that are bigger make it 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.
How many times have you purchased a stock or option and wound up actually being right and seeing some profits - only to have the underlying immediately turn around and retreat back to it's starting position wiping out all the profits?
Once a gain is showing on the trade - through gamma scalping you can lock that in. And once again, 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.
For option income traders who are struggling in these especially volatile times trying to use the standard income trades like condors, credit spreads, and calendars, Gamma Trading is a good method to learn and consider using and adding to their collection of other option strategies.
And along with being stress free and profitable - it's fun too.
About the Author:
Learn more about gamma scalping. Stop by Ted Nino's site where you can find out all about how to trade the iron condor strategy for consistent monthly cashflow.
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