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Stock and Option Trading for Teens

January 17, 2014
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Options Trading: Earn a Living Trading Options – Video 8

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I had to wait about 15 minutes or so and then I simply locked in my profits as I showed you on the Qs last week.  What I did was I combined both my Q position and my IWM position into the profit graph here on this analyze tab.  It shows you that I have both the IWM and the Q positions on the three-legged box and basically this is where we are right now.

The live price is $75.47 which is right in here.  Remember that the green line is our expiration and the white line is our current price.  What I’ve done is I’ve locked in a profit.  I have an open profit of $554 on this position.  But what exactly has this combined position of the Qs and the IWM ETF done for me?   Well what it’s done, really,is given me not only a guaranteed profit of $478 at expiration,even if it doesn’t move,but it also has given me unlimited upside potential and unlimited downside potential.  As you can see.I can’t lose money on this position.  It’s impossible.  It just can’t happen.  I’ve locked in my profits so if the market just stays the same well I’ve got $554 open profit.  I’m guaranteed a profit of $478 at expiration.

Now remember that we’re only using a few contracts.  This is just fordemonstration.  I’m showing how you can make money even with smallamounts of contracts.  If I was doing ten times as many contracts, obviously I’d have a guaranteed profit of $5,000.  I mean it doesn’t get any easier than this.

The upside to this and the real potential these types of three-legged box in locking the box positions is that not only are you guaranteed a profit if the market doesn’t do anything,but if it starts to go up dramatically or if it starts to drop dramatically, it doesn’t matter.  The market can go up or down and you can make an unlimited amount of money.  Here’s the profit area.  Your zero line is down here.  You have nothing but profit whether it goes down or it goes up.

So that’s the power of thekind of trading that we do.  You try to hedge your positions asmuch as possible.  You try to manage the risk.  We manage these risks by the numbers.  So in other words, when we first put on our IWMposition, we looked specifically at the delta.  I wanted to be long a certain amount of delta because based on the analysis that we doon a regular basis, and you see those in the technical analysis modules, we knew the market was going to go up today.  Just like we knew it was goingto go down earlier in the week on Monday and Tuesday.  Today is June 5.  We knew over the weekend that the market was going to decline.

Wetook a position that gave us an opportunity to lock in these profits.  So we locked in the profits on the downside and we knew the market was going up.  Now we’ve locked in our profits on the upside and it doesn’t matterwhere it goes because we’re guaranteed a profit.

I have never seen anybody else explain this concept in 20 years of trading and going to all of the seminars and the marketing stuff that these people put out.  This is a pretty dynamic way to trade because you can’t lose money at this point.  You have no other costs.  You initiated the positions.  You have no other costs at all because all of these are June expiration contracts and in the next week-and-a-half they are going to expire and you are guaranteed at least the $500 profit.  And remember, as I said we’re only doing small contracts.

So that’s how you trade with confidence.

This is the kind of information that you aren’t going to find anywhere else.  As we go through these types of trades in the future, especially after we get through Module 11, you are going to see the dynamics of how to lock in profits on just about any kind of position that you have.  And not only lock in profits butgive you unlimited upside or downside potential.

So that’s it for today, guys.  Hey, trade with confidence

 

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