12 Sep

AMA: How Do Options Traders Generate Ideas?

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The recent whipsaws in the market have left some traders dazed and confused — as if they were deer in the headlights… frozen up, not knowing what to do.

There’s one response that really piqued my interest…

The million-dollar question: How Do Options Traders Generate Ideas?

I believe it’s a crucial skill all traders need to learn, not just those who trade options.

Of course, you may know a few ways options traders use generate trade ideas, such as following the “smart money” or using chart patterns.

I want to reveal to you the techniques I utilize to generate trade ideas and lock in gains like these.*

 

Want to find out how my risk-defined strategy allows me to win in three different scenarios?

Click here and I’ll show you.

You see, in this market environment… it’s important to understand how to come up with ideas on your own — otherwise, you might force trades and get pummeled by the market.

 

Struggling To Come Up With Trade Ideas? Try This

 

If you’ve been struggling in this environment, don’t beat yourself up.

The key to navigating this market environment, in my opinion, is to have trade ideas and plans in place — so you know where to get in, stop-out, and take profits.

When it comes to options trading, you might get overwhelmed at first trying to come up with trade ideas.

For example, how would you know which strike price and expiration date to select? How do you know how far out to look and where a stock can go?

It can be frustrating at first.

That’s why I try to take a different approach when it comes to options.

You see, everyone and their brother love to bet where a stock will go within a certain timeframe. However, what they don’t realize is that can actually stack the odds against them.

Think about it like this, if you buy calls or puts outright, you would need the stock to move to your favor and the level of implied volatility to rise. Not only that, but time is working against you. So every day the move doesn’t happen, the premium gets sucked out of them.

Whoever sold the options would actually be gaining off this.

So rather than betting on where a stock will go… I want to bet where a stock WON’T go.

Why?

Let me put this into perspective.

If you bet where a stock won’t go, there are multiple ways to win. For example, I don’t need the stock to move to my favor to profit. In fact, the stock can stay sideways or even go against me a little, and I still can profit on the options position.

How?

Well, I’m selling options here.

More specifically, I’m using bull puts or bear calls.

I know what you’re still wondering, “How do I actually come up with the trade ideas?”

Well, I either look at my chart patterns and identify key areas of supply and demand

Or I turn to the “sucker bet” scanner, which I believe can be easier for beginner options traders.

For example, if you take a look at the screenshot below…

 

 

They’re low-odds bets being placed by traders. It’s possible to just focus on one key indicator to generate trade ideas, and it’s known as % Chance OTM.

If you can find trades in which the % Chance OTM is high (above 90%), then you can actually take the opposite side of the trade and hedge your position.

That way, the strategy allows you to be in a position to win in three different scenarios.

Let me show you how to utilize this indicator to generate trade ideas.

 

*Results presented are not typical and may vary from person to person. Please see our Testimonials Disclaimer here: https://ragingbull.com/disclaimer

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