A reliable option strategy to cashflow the market during volatile times is Gamma Scalping. This strategy works best in crazy markets unlike the standard option income strategies such as the iron condor, the calendar spread, credit spread, etc. Gamma Scalping is a great alternative for option traders to utilize when volatility reaches levels that make those other option strategies too risky – and this strategy can deliver the goods as well, producing comparable income if not more.
Gamma scalping allows a trader to set up a trade that can profit if the market moves either way – and then immediately lock in those profits and ‘re set’ the position to once again profit if the stock moves in either direction. Think of gamma scalping as a way to day trade without having to pick direction – taking away most of the risks that are normally associated with day trading.
Similar to a straddle, when using this strategy, we don’t care what the market ends up doing. We are properly set up to profit either way. Up or down, it doesn’t matter. The underlying just needs to move.
After a predetermined profit has been realized from a move in either direction, a quick adjustment is made to the trade to lock that profit in forever. And, this same adjustment re sets the position to kick out even more gains no matter what the stock being used ends up doing, even if it just moves right back to the same spot it started from when the trade was first put on. The best part is that this simple technique can be used over and over again on the same trade – constantly chipping out cash from the same position.
How many times have you purchased a stock or option and wound up actually being right and seeing some profits – only to have the underlying immediately turn around and retreat back to it’s starting position wiping out all the profits?
Trading this way takes so much stress out of trading – and actually makes it quite enjoyable. Gamma scalping allows one to not have to be right about direction and still have the ability to be very profitable. Wether the market heads up or falls down – we don’t care. Either way we can make money.
For option income traders who are struggling in these especially volatile times trying to use the standard income trades like condors, credit spreads, and calendars, Gamma Scalping is a good method to learn and consider using and adding to their collection of other option strategies.
And last but not least – it’s a really fun way to trade as well.
Learn more about gamma scalping. Stop by Ten Nino’s site where you can find out all about how to trade the gamma scalping strategy for consistent monthly cashflow.