When a trader writes (sells) options: The more time until the expiration date of the option – the more risky the trade becomes. There’s more time for something to go wrong. Another way to say this is “that the longer time you are exposed to risk, the higher the cumulative risk becomes.” Conversely, the shorter the time until the option’s expiration date, the less risky the trade is.
When a trader writes (sells) options: The farther out-of-the-money the strike price is, the lower the risk. Conversely, the closer the option is to the money (the price of the underlying), the more risky the trade.
To sum up both of these statements up in an analogy: If you are a foot-soldier: The less time you spend in the battle, the safer you are. And the farther away from the front-line of the battle you stay, the safer you become. In special situations, the sniper’s very specialized strategy can be the most effective – simply because he remains invisible away from conflict – and because each target is very specific. This blog is used to help teach small and medium traders how to use a very specialize & specific strategy to create income.
When most of us began trading, we learned the very basic and binary principle: Buy low and sell high. This way of trading is the most popular and the easiest to understand. It works over decades of time to buy value and let it appreciate, but it does practically nothing to increase income in the short term; it is a long term solution based on deferred gratification (retirement goals.) When traders try to use the same strategy to create income, they enter the very risky game of “target price trading.” Short-term stock trading (sometimes called “day trading”) requires the trader to portend: the price range, the direction of price movement, a target price – and all that within a shortened time period. Its a very hard way to create income. One wrong guess and your “short term investment” can tie up your money for months just trying to break even – and your money-making plan is on hold if not totally kaput.
For years, wicked smart money managers for high-end investors have used option-selling techniques for their clients. One of these premier strategies is the same one featured in my book titled Selling Commodity Options – The Time Farming Income Machine. The articles here and the examples in my book show you actual trades placed in my own accounts. All of these trades are high-probability trades and they last from 30 to 120 days (with a few exceptions.) You and I don’t have to be smart enough to invent fantastic ways to trade, we only have to be smart enough to recognize and use them.
There is a way of trading based on almost the exact opposite of stock trading; instead of trying to guess where prices will go, we only have to learn to how to tell where price are not likely to go. The latter is much easier, I promise you. Right now, you can get a FREE 60-day trial of my subscription-based newsletter called The Time Farming Training Bulletin. There’s no credit card required just your name and email, that’s it.
You can make up your own mind. I send out trades that I place in my personal account. I urge readers to follow along, put the trades into their paper-money account to practice and learn. I don’t send out theoretical trades or any fake back-tested so-called results. You follow along free for 60-days; you have nothing to lose and it won’t cost you a penny to see and study exactly the ‘how’ and ‘why’ of each trade I place. This is not a trade advisory service. It may or may not be for you; that’s up to you to decide. I send out my trades (same day after 2PM Eastern time.) This is not a get-rich-quick method; it is a strategy for you to make additional income. If you are worth millions already, pay a professional to do these trades for you; I know a really great one I can send you to. (It isn’t me, I only trade my own money.)
The strategy in my book and newsletter is no secret. In fact, the title of my book tells you what it is: “Selling Commodity Options.” I sell far OTM commodity options in harmony with seasonal price trends (when possible) and most of my trades have 95% probability of success. My book and newsletter can teach you how to do it. I am not a broker or a trade advisory service (I don’t want to work that hard.) I am a writer and educator. After being a private commodity hedge risk management consultant for over 25 years, I enjoy sharing some of what I learned. I only write books with practical financial applications for people who want to improve their situation. And my books are written specifically for small and medium investors. There’s no such thing as “free lunch”, you have to work a little to learn this type of trading, but then you get to use it the rest of your life (and there’s no student loans to pay off with this plan!). I really do want to show you a smoother-better-smarter way to make money for small and medium investors. – Don A. Singletary