Making Money on Put Strategies

As I mentioned before in a previous post, some very successful traders use put strategies to make a lot of money in the market.  This was a very lucrative time for many traders who do.  The market was going up and people didn't know where it was going to stop.  Then instability came into the market through Cyprus, Greece and now with the attacks in Boston.  You can almost guarantee something is going to happen in a two-month time period to cause markets to destabilize and when they do the S&P, DOW and NASDAQ all go down.  The best play of course is the SPY because it responds directly to big dips in the market.  The options are also real close between the Bid and Ask price so this makes it easier to get in and out of your trade.

The market always goes up slowly and comes down fast.  You will almost never catch the market going up fast unless it is on some news that nobody but insiders know and when it does it is usually in after hours trading so you missed the run (case in point: Sprint shot up a whole point over night the other day after Dish Network said it wanted to buy them).  So the play is to wait for the market to go up and then place put options at various points going at the most two months out.  For example the market is already down today so I would wait until SPY gets back to 157 and then as it goes up place put options for the June 155 strike price.  Then wait and see what happens.  You can place your stop at 159 and your limit at around 153 (I know the options order window in TOS doesn't show the strike price but after you play around with adjusting your trade price it will show you on the chart where your options orders are).  

Yes it's great to have stop and limit orders but always watch your trades.  There are sometimes your bid doesn't go through as quickly as you would like and you could miss some profits or worse lose money.  When you see your profit margin approaching it may be a good thing to call your broker and ask him/her to place the trade for you at your trade price.  Depending on the brokerage firm they can actually execute your trade for you better than your computer.  They can find a buyer for you and make you some good money.  I've had good experiences with Trade King and highly recommend them.

OPTION TRADER makes $105MM PROFIT

This lady has uncanny skills in picking option trades.  Her basic approach is not too complex at all.  She started out just shorting stocks as they go up, making money on the corrections.  Seems like a very successful and efficient way of trading, no iron condors, butterfly spreads, etc. just a basic wait and pounce approach.

This approach actually makes a lot of sense.  You can almost always guarantee that any stock will go down at some point in time over a two month period.  There is enough drama happening to make all stocks sink down at some point during any given week.  So by placing a put on a volatile stock when it rockets up you can almost guarantee some sort of profit during a two month window.  All the successful traders I've researched recommend a two month window for options trades.  I tend to agree unless you are strictly trying to gamble as in the case of binary or weekly options.  No one knows what's going to happen in the short term but you can almost guarantee the market will go in either direction in the long term.  She's just playing the downside.