Many option income traders think that when markets are volatile they need to stay out of the game. Not so. Enter Gamma Trading. Here is a little known option trading strategy that can provide consistent profits from markets that seem too wild and choppy to use the usual strategies like iron condors, calendars, and credit spreads.
This strategy is initially set up to profit no matter what the market winds up doing. If the stock or index being used immediately goes up or down, a gain should be realized either way. Then, using the gamma scalping adjustment technique, the trader can lock in those gains, capturing the profit, and then immediately 're set' the trade to once again make a profit no matter what the stock or index being used winds up doing.
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.
If you have ever put on a directional trade, actually started to make a profit, then watch your stock promptly turn around and head right back to where it started from erasing your gains, gamma scalping is a strategy you should look into.
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.
During wild crazy times, especially like the extremely volatile markets we are currently experiencing in the markets, Gamma Trading should be considered a 'must have' method for option traders to learn how to use correctly.
And last but not least - it's a really fun way to trade as well.
Want to learn more about gamma scalping ? Then visit iron condor to find the best option trading free tools and training.
Author: Ted Nino
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