Options trading can be a great way to make money, but it’s important to learn the basics before you start. In this video, we’ll teach you how to make your first three options trades. We’ll also go over some of the basics of options trading and how they work. By following these simple steps, you’ll be on your way to making money through options trading regardless of which way the market moves!
We discuss:
Opening an options trading account
Selling a Naked Put
Selling an Iron Condor
Selling a Call Vertical Spread
Real quick guys, please hit the like and subscribe buttons below as well as comment and let me know your thoughts on this video.
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.
So let’s get started!
Opening an options trading account
In the previous video, I went into detail about opening an options trading account in Tastyworks. For that reason, I am not going to go into detail about opening the account in this video. If you missed that one, I’ll put a link below and you can check that out.
Tastyworks is our recommended broker for options trading. It was also named the best options trading platform in 2022 by Investopedia. It’s the one that I use because it’s user-friendly and intuitive. I’ll put a link below that will give you access to their special offer. Currently, you can receive up to $2000 cash back when opening a new account.
Selling a Naked Put
We also covered placing the first options trade in that previous video. We sold a naked Put in a low-priced stock DraftKings DKNG.
We choose the 12.5 Put option which gave us a 72% POP or Probability of Profit. We collected $92 upfront when we placed the trade and we used just $158 of buying power. It was great ROI! Use the link below to get all of the details of that trade.
Selling an Iron Condor
Now we are going to place our second options trade. Since our first trade was bullish, we are now going to place a delta-neutral trade. We will make money as long as the stock price remains within a range.
We will sell an Iron Condor in AAPL. Apple has high IVR at 94.6 so it is a good candidate for selling an iron condor. We sell the 120/125 Put vertical by selling the 125 Put and buying the 120 Put. We then sell the 155 Call and buy the 160 Call option. We collect approximately 1/3 the width of the strikes by collecting 1.75 ($175) on the $5 wide spread.
Now if we look at the Curve Mode on the Tastyworks platform, we see that we keep our $175 profit as long as the stock price stays within the green range before the expiration date.
Now that we have placed a couple of trades we want to place our third trade. Since we have a bullish and neutral trade, let’s place a bearish trade so that we can also profit when the market goes down.
I like to use the ETF’s for bearish trades since they take into account a large basket of stocks.
Selling a Call Vertical Spread
We will sell a Call Vertical Spread in QQQ.
We accomplish this by selling the 280 Call and buying the 285 call. We collect $1.68 ($168) which is approximately 1/3 the width of the $5 spread.
If we look at the Curve Mode we can see that we are profitable as long as the stock price stays below $281.68. With the stock currently trading at $266 we have quite a bit of room for the stock to move and still be profitable.
The max loss is $332 and this is also the buying power that this trade will take. By having a negative delta trade on, we make money if the market moves down. We can take profits at any time before expiration.
We hit Review and Send and place the trade. You have now placed your first 3 options trades!
Thanks for watching! I hope this helped you better understand how to place your first options trades. Please remember to comment below, hit the thumbs up and subscribe so you will be notified of more videos like this.
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.
Happy trading and see you in the next one!