Since I started the Conservative Options Course in 2015, I have talked with many traders who either lost too much money trading options and wanted to recover their money or made some money now and then but not consistently.
It’s a privilege to be able to talk directly with so many traders all over India. So I know what they want, why they trade and why they lose.
Most traders want consistent income trading options. It is good that most of them knew that it is not possible to double the money in 2-3 months trading options but almost everyone said they heard that someone out there is making 100% or more in every trade.
But when I asked them to name that person, they replied that they have just heard not seen.
The fact is they will never see that person because no one makes a 100% return in every trade. If this is not possible then what is? Generating small but regular income is a possible trading option. Options trading is NOT a get-rich-quick scheme that most of the newcomers to the trading world think.
In this article, I will explain some option income trading strategies. These types of strategies try to generate income regardless of the market condition.
When I was new to the options trading field I thought the best possible way to generate easy money was to buy a call and a put at the same time – one of them will make money. This is simply not true. Though it may work 1 out of 10 times, you do not know which is that time and hold, so you may end up taking a loss even though this was the best time to hold.
If you want to make consistent income trading options you have to practise trading them initially on paper and then in the real market.
Options Income Trading are strategies aimed at generating profits or income over the long term while minimizing price and volatility risk. Unlike directional trading, income options trading does not rely on price fluctuations of the underlying asset to generate returns.
Income strategies are designed to perform best when the price of the underlying asset is flat. Due to the lack of direction, the yield strategy can be profitable in both bear and bull markets.
Some of them are iron butterflies, straddles, strangles, condors etc. They are freely available on Youtube and many websites online. Yet 99% of traders lose money according to a SEBI report.
My paid course, therefore, has all non-directional option income strategies. The difference between my course and freely available strategies is that you cannot contact anyone for help to understand the strategies. But in my course, you get help for one year. Without a mentor, any freely available strategy is not worth trying as anyone – even your neighbour can upload a strategy on YouTube. This is counterproductive and dangerous for their followers. You cannot blame the Youtube video makers for your losses. It was freely available and no one forced you to follow. So you can only blame yourself for the losses.
To be honest, unless a trader is good at discerning price movements and market direction, it is difficult to accurately determine the direction of an underlying asset’s price movements. Even technical analysis cannot predict the market direction 100% of the time. They are correct 50% of the time. This is because the short-term movements of stocks are very random. So discipline is more important that the direction you are taking as per your technical analysis.
Therefore it is advisable to trade direction independent strategies also known as option income strategies. One of the advantages of option income trading strategies is that you don’t have to choose the right direction.
For this reason, option income strategies are also called non-directional or delta-neutral strategies.
Trading for income doesn’t give you much profit, but it often doesn’t give you much loss either. The reason is all the strategies are non-directional and are properly hedged. The hedge ensures that you rarely lose money and even if you do you its not huge as the hedge will make some money while the original trade loses.
The naked traders lose everything however the option income traders only lose a part as some of the losses are offset by the hedge trade.
It’s unfortunate that most of the traders who know that a hedge will save them from huge losses still chose to trade naked in the hope that they will make a lot of money. In reality, vice versa happens. Then they go for revenge trading. Instead, one should keep patience and try to bounce back from bad trading.
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INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.
DISCLAIMER: I am NOT an Investment Adviser (IA). I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.
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