| Gamma Scalping - Cashflowing Volatility |
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| Written by Ten Nino |
| Wednesday, 23 June 2010 10:35 |
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Many option income traders think that when markets are volatile they need to stay out of the game. Not so. Enter Gamma Scalping. Here 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.
Many option income traders think that when markets are volatile they need to stay out of the game. Not so. Enter Gamma Scalping. Here 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. Gamma scalping allows a trader to set up a trade that can profit if the market moves either way - and then immediately lock in those profits and 're set' the position to once again profit if the stock moves in either direction. Think of gamma scalping as a way to day trade without having to pick direction - taking away most of the risks that are normally associated with day trading. Similar to a straddle, when using this strategy, we don't care what the market ends up doing. We are properly set up to profit either way. Up or down, it doesn't matter. The underlying just needs to move. This option trading method allows the trader to continually grab - or 'scalp' - profits from the same trade position. Once a profit is realized from a move either up or down, the trader locks in that gain using a super easy to implement adjustment method that not only captures that profit - but also re-sets the position to once again profit either way the underlying winds up going. And this can be done, over and over again on the same position. If you have ever put on a directional trade, actually started to make a profit, then watch your stock promptly turn around and head right back to where it started from erasing your gains, gamma scalping is a strategy you should look into. Trading this way takes so much stress out of trading - and actually makes it quite enjoyable. Gamma scalping allows one to not have to be right about direction and still have the ability to be very profitable. Wether the market heads up or falls down - we don't care. Either way we can make money. 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 profitable - it's actually quite an enjoyable way to trade too. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. To find out more about gamma trading , visit Ted Nino's site on how to correctly trade the gamma scalping strategy for consistent income. |