okay so this past weekend was Memorial
Day the unofficial first weekend of the
summer and for most Raiders in most
years that means there's a good chance
that volatility is going to drop
especially in late July and early August
when lots of traders are on vacation and
chilling out and if you're like most day
traders you get frustrated during these
times because it's very hard to find
stocks that will trade cleanly and with
enough movement to have strong trading
days more likely you can experience
frustrating days where you get chopped
out of trades frustrated by algos and
basically expending a lot of effort with
little if anything to show for it in
other words when volatility is dropped
out of the market how can you make money
trading well the good news is that
there's a trading style that performs
best when the market isn't moving now
that may be counterintuitive but there
actually is a trading style which
thrives when the markets not moving at
all so if you're interested in learning
a trading style that has a very high
probability of turning a profit while
you're struggling to find stocks that
are moving enough for you to day trade
them in other words if you'd like to
learn how to make money while the market
is basically dead then you're gonna want
to watch this video
[Music]
hi I'm Seth Freiburg and I'm the head
trader of SMB capitals options trading
desk SMB capital is a proprietary
trading firm located in midtown
Manhattan and we provide capital for
options and equity traders from all over
the world trading both remotely and
right here in our offices in New York
City now you're gonna want to click our
subscribe button right now so that you
don't miss any of our free trading
videos produced for the trading and
investing community now in this video
we're gonna be talking about an options
trading style known as options income
trading which we think is the best way
for you to normalize and balance your
trading profits throughout the year if
you'd like to learn a trading style that
will almost certainly make money at the
very times that you're struggling to
make profits on day and swing trades
then we think this video will help and
if you'd like to learn three real-world
option strategies that our traders use
including the surprisingly simple and
powerful strategy that some of the
greatest investors in the world like
Warren Buffett use all the time plus an
options trading strategy that has a
statistical 80 percent probability of
profit month in and month out plus an
option strategy that you can employ with
the stock that you like where you'll
make your target profit whether the
stock goes up goes nowhere or even goes
down a small percentage then you should
check out the free options class that
we're currently running just go ahead
and click the link that should be
appearing now at the top right hand
corner of this screen that will open the
free registration page in a new window
so don't worry you won't lose this video
it's an extremely rare opportunity for
retail traders and investors to learn
directly from Wall Street traders but
that's exactly what you'll be getting
through this video online workshop so
click the link to sign up now and don't
miss it okay so let's dive into a little
more detail here we've already
established that the most frequent
complaint among day traders is that they
really struggle to make money and slow
market times but there's something
called options income trading that does
well during that very same time now you
may be asking yourself how can I
simultaneously day trade yet incorporate
a completely new trading style into my
arsenal of trades well let's examine
that most day traders will tell you that
their most profitable trades are made
during the first hour of the market
and the last hour of the market that's
the time that you've got to be
laser-focused on your day trades in
order to take advantage of the best
opportunity well here's the good news
options income trades are actually best
initiated and managed during the off
hours in the market those hours between
the first hour and the final hour of
trading in fact many options income
traders refuse to trade it all during
those hours because options pricing is
usually less favorable during the
opening drive and the final hour so for
technical reasons options income trades
can almost always be managed while
you're inactive as a day trader so it's
kind of a perfect complement to a day
trading practice not only is options
income trading the most successful when
the market moves but it's also easily
incorporated into your trading practice
because the trades are managed when
you're less engaged in your day in swing
trading but most importantly options
income trading acts as a great balance
to your day trading practice because it
will normally perform exceptionally well
during calm periods of the market like
those which usually appear in the summer
at one stretch or another now there are
hundreds of strategies that you could
implement using the options income
trading style but there are certain ones
designed so they only need to be managed
literally once a day usually in the
afternoon at some point that way you can
maintain an active day trading practice
while your options income trade is
operating in the background only needing
to be checked say once a day to make
sure that the trade is remaining within
the risk management standards of that
particular trade so one thing you need
to know before we jump into an example
is that there is more to options then
call and put options on stocks you can
also trade options on indexes like the
S&P 500 or the Nasdaq 100 as well as
many other indexes also it's important
to understand that when you trade
options you can be long those options
where you can be short those options
when you're long those options you're
paying a premium to the seller of the
option and when you're short options you
get the premium that the buyer pays to
you so with index options it's a lot
more like a pure bet if you buy an index
call and the market goes above the call
price then the seller of one option owes
the buyer 100 dollars for each point
above the strike similar for puts if the
market goes below the strike price of
the put then the seller of one put
option owes the buyer of that option 100
dollars for each point below the strike
price of the option but if the market
stays below the strike price of the call
or above the strike price of the put
then the option just expires worthless
in either case the seller of the option
wins the bet and pays nothing to the
buyer so let's take a look at an example
and I think this will become clear to
you so there's an options income
strategy which is known as the iron
Condor which can be traded in lots of
different ways but there is one approach
that's very simple and was designed to
be checked once a day over the life of
the trade sometime between 2:00 and 3:00
in the afternoon most days there will be
absolutely nothing to do and you'll just
go back and focus on the rest of your
trades on those few occasions where
you're where you're gonna have to take
some action that action can be executed
readily usually within 10 or 15 minutes
and then you're done and you can
concentrate on the rest of your active
trades so let's look at a simple example
of that iron Condor trade
so in this Condor on a real index with
real historical data by the way on this
day the index was trading at 1114 and
what we did here was we took half of the
capital that we're gonna use in this
trade and we sold the 1210 call and
received $1,900 for it we bought the
1230 call and paid 900 $30 for it
resulting in 970 dollars of cash flow
into our account for the call side of
the trade on the put side we sold the
tenth input and received 8,000 $150 and
we bought the 990 put and paid 60 100
dollars for so all of that combined
produced a total of three thousand and
twenty dollars when we consider
everything we received and everything we
paid for so that's how much cash we
received in our account for this
transaction next we do nothing at all
for two full weeks according to this
protocol and at that point we add the
second half of our capital in
reproducing that same Condor selling
another 10 lot iron Condor at the same
strikes but this time we're going to get
paid a little bit more just because the
markets
moved around and the options have
changed prices as a result for the so
for the first half of our capital as I
mentioned we received three thousand and
twenty dollars into our account and for
the second half of our capital we
actually received four thousand four
hundred fifty dollars in cash a little
bit more in this example for a total of
seven thousand four hundred seventy
dollars of income once all of our
capital has been dedicated so to review
there's been seven thousand four hundred
seventy dollars received we've done two
transactions in 14 days and now we do
absolutely nothing for another 28 days
until we're 42 days into the trade at
this point we closed the put side of the
trade as a risk management procedure to
close off any risk on that side of the
transaction for a very cheap price forty
bucks
that's excellent risk management that
all experienced options traders would
employ and then finally we skip to when
the options expire and we've earned
other than the forty bucks we spent to
close the put side almost the entire
seven thousand four hundred seventy
dollars that we got in for the trade in
the first place why because the only two
remaining parts of the trade the twelve
ten calls in the twelve thirty calls
have no value on the final day of the
trade they expire worthless because
according to the definition of an index
call contract unless the market had
closed above twelve ten neither of the
calls would have had any value so the
call options that we were short and the
call options that we were long they just
all expire with no value and you get to
keep about seventy four hundred dollars
as your profit so if you were paying
close attention you'd realize that we
had just three transactions over fifty
six days all done in the mid afternoon
and with a minimum of effort we didn't
even have to actually close the trade as
the options just expired so you can see
that this is a very doable practice to
execute alongside your day our swing
trading in this example as long as the
market had stayed relatively quiet and
remained between twelve ten and ten ten
all the options were going to expire
worthless on expiration day so during
the period of quiet as often happens in
this summer this kind of trade will do
great while you may be struggling with
your date
reading so you you can end up having a
solid month even though your day
training was not particularly strong
this is the beauty of balancing your day
trading with options income trading it
balances your portfolio of trades to be
able to excel in times of high
volatility and times of low volatility
so if you take one thing away from this
video I'd like you to understand and
accept that there is a way to make good
money trading while the market is dead
the very times that day trading is much
more of a challenge and that's called
options income trading these types of
trades are not that hard to master and
very simple to initiate and manage
certain trading styles just don't need a
lot of management once a day we'll do it
in most cases once you get the hang of
it yet the return potentials are
outstanding if you develop the skills
and understanding to manage and initiate
these trades and that's why we got a
trading desk exclusively dedicated to
options income trading here at SMB and
just to remind you if you'd like to
learn three more real-world option
strategies that our traders use
including the surprisingly simple and
powerful strategy that some of the
greatest investors in the world like
Warren Buffett use all the time plus an
options trading strategy that has a
statistical 80 percent probability of
profit month in and month out plus an
option strategy that you can employ with
the stock that you like where you'll
make your target profit whether the
stock goes up goes nowhere or even goes
down a small percentage then you should
check out the free options class that
we're currently running so just go ahead
and click the link that should be
appearing now at the top right corner of
your screen that will open the free
registration page in a new window so
don't worry you won't lose this video
it's an extremely rare opportunity for
retail traders and investors to learn
directly from Wall Street traders but
that's exactly what you'll be getting
through this free online workshop so
click the link to sign up now and don't
miss it now one more thing I'd like you
to do is go ahead and click our
subscribe button so you don't miss any
of our trading videos produced for the
trading and investing community and
while you're at it please add your
feedback in the comment section for what
videos you'd like us to produce next as
well as what you found helpful in this
video so from all of us here at SMB