While I’ve been on vacation, the market has been rather sluggish — trading between 2800-2825 in the S&Ps (for the most part).
While I prefer an explosive, directional market (who doesn’t!?), I also appreciate premium selling strategies, and more conservative, directional takes like butterflies and unbalanced butterflies.
You have to think of the market like the weather. When it’s 100 degrees and sunny, you’re going to want to dress lightly and add some sunscreen. When it’s 32 degrees and snowy, a jacket and hat are probably required.
In the stock market, I like to trade these varying weather patterns with varying options strategies.
That’s why today I’m going to talk about several different strategies that you can add to your trading game, so you can be actively trading no matter the market.
I’ve put it in a nice fun download as well (so yay, another exclusive ‘Five Star’ community download).
Check it out in this issue near the bottom…
So sometimes, we’re in a strong, trending market. Other times, like right now, this meandering sideways action can be taken advantage of with specific strategies.
These strategies are also especially helpful while on vacation. When I know I can’t watch my screens for the 6.5 hours that the markets are open, I can stick with more conservative options strategies.
Right now, I have butterflies on in ADBE, NFLX, and BA, allowing me to trade these conservatively and still hit the beach.
My more aggressive plays in COUP, the Dow and again, ADBE, allow me to make more but don’t have too much risk on to the point where I can’t enjoy my day.
Here’s the download I told you about earlier — it’s my PDF of my Top Four Options strategies.
Learning setups in the stock market are critical to success, like those taught in my classes like the Five Star Setup (as taught in my Ready, Aim Freedom class), but a successful trader must also learn a variety of options strategies to weather different market conditions (and vacations).
But, now I want to hear from you.
What kind of options strategies do you want to learn more about? Stacking butterflies has been my favorite, as of late. Drop a comment below, and I’ll write about the strategy next time.
I would like to learn more about butterflies. Thanks.
Danielle. As usual, this was excellent. Clear. Concise. Thorough. I am still learning about butterflies — and finally built an Excel spreadsheet so I could figure out how it works at various price levels. I am going to do the same for Debit Spreads. John spoke about them a bit during the small account live trading this week. Suggestions for future posts.
1. Continued discussion of butterflies…. and perhaps, a beginner’s view of the crazy line graph that everyone shows. It completely confuses me.
2. Theta decay… and IV…. and how to deal with this in various scenarios… like going into option. Also confuses me completely.
Thanks as always for your great explanations. As an ex-third grade teacher and then sales training guy…. I appreciate your skills.
I meant going into earnings….. not going into options… sorry… Fat fingers.
Stacking butterflies sounds interesting. How does it work? Thanks.
Danielle,
Great, informative, helpful articles you have here!
Since you asked, I’d like to know more about butterflies! It seems like you, John, Henry and Bruce always know just where to place the shorts… How do you guys always seem to know right where the price is going to be on the chosen expiration? And what makes you select said expiration to start with? When is it best to break a wing or not? These are all things I ponder on! And now, of course, I want to know what/when/why you might stack a butterfly!
Thanks for all you do, keep up the great work!
Premium selling strategies and Butterfly’s. All variants (Balanced, Unbalances etc).
Thanks…