Is options trading for you? In this video, Justin briefly explains the type of options trading strategy, how much money you’ll need, how much profit to aim for, how much risk is involved, and what time commitment you need.
In this video…
:31 - General strategy of this program.
:52 - Positives of this options-trading strategy.
3:07 - How much money you’ll need to do this options-trading strategy.
7:59 - How much profit should you aim to make.
10:00 - Understanding the risk of this options-trading strategy.
11:20 - How much time you need to do this options-trading strategy.
In this video, Justin explains a rule of thirds risk/profit guide that he developed. You can access this table here.
Review:
The Trade to Live strategy focuses on 1-day to expiration Vertical Credit Spreads on Indexes (particularly the NASDAQ). This strategy allows for up-front profit, getting money out of margin quickly, and doing daily trades to maximize profit. By focusing on trading on indexes, it takes the most difficult part out of options trading - finding good stocks to trade on.
For this strategy, we’re going to focus on 20-point strikes, meaning each trade will cost $2000 per contract. It’s recommended to follow the 3x rule. Have $2000 per contract for the next day’s trade, have $2000 per contract for the following day’s trade, and have $2000 per contract in reserve. So if you’re trading 5 contracts, you should have $30,000 in your account. The more money you have to trade with, the easier it is to trade and to fix at-risk trades. However, the recommended minimum is $6000 in your account.
On a 20-point spread, the goal is to make between 2.5-10% profit per trade. Most of the time, the profit will be between 2.5-5%. This means that if you are doing a trade that costs $2000 per contract, the goal should be $50-100 per contract.
It’s important to understand that options trading is incredibly risky and can result in the entire loss of the money you put up in margin to make the trade. This program teaches how to mitigate losses and maximize profits, but there is no such thing as a 100% guarantee of profit when options trading.
Finally, this program focuses on a strategy to maximize your free time. Most of the time, trades are executed within an hour-and-a-half after market opening.