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"Price level selling" - the probability on your side!

Options Trading

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How can you make money?

If you don’t know about options, how can you make money on the stock market or on the market of any underlying product, for example on the Forex market?Directionally, of course, either with short or long direction. There are no other possibilities.

If the underlying product moves sideways, you do not earn anything, you may even suffer losses (capital cost - loss of interest). 

Everyone who simply trades underlying products, accepts this. But options traders know that they can earn money in a much more flexible way. When it comes to shares, if you bet on long, you suffer a loss with short or sideways directions.

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33% Probability

That is, two of the three possible directions make losses. 

Let's accept that sideways movement makes a loss as well, because it is essentially lost interest income. 

So, with this in mind, a stock trader can make money in only one out of three directions, this is a probability of 33%, as far as the direction is concerned.

33%

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How can you reach a greater probability?

Options traders know that they can achieve much better probability.

There is a wide variety of strategies for doing so. One of these strategies is the one I call  "price level sale".

In this case, I sell a price level that is adjusted to a strong support or resistance level.

I formulated this for my students as follows:

"You do not have to know your target price and when it will come true. It is enough to suspect the price above or below which it will not be at maturity - that are major support and resistance levels ..."

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Let's look at two examples!

Example1: XYZ shares are at 50 and the price bounced 2x from this price level, because a strong support held it. Now, I sell the 50-level and play for a price of 50 or above at maturity. In other words, it either moves sideways or rises and I make some profit.

Example 2: XYZ shares bounced off from the 100–price level for the second time. In this case,  I sell the 100 level and to play for a price of 100 or below at maturity. In other words, it either moves sideways or falls and I earn some money.

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You can be profitable in 66% of the directions

Thus, using these two strategies, I make a profit from two of the three directions, that is, in 66% of the directions!

Direction probability needed for a stock trader to make some profit is 33%, while it is 66% for an options trader.

Think about it, you can be profitable in 66% of the directions, ie. you can earn money in two of the three possible directions.

Stock traders make a profit only in one direction - but you do not need get caught up in the world of shares :)

66%

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Feel free to ask me!

Email: gery@optionsrules.comMy webpage: http://www.optionsrules.com/

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Skype: opcioguru