Gaps, Statistics, and Candlesticks: $3,000 to 1 Million via Trading Options

verial

Member
53 4
Idk, why do we exist would probably be an easier question to answer than trying to explain options to me.

Let's assume you believe that the temperature tomorrow at 5pm will be higher than today's 5pm temperature. At the same time, I believe the opposite: that the temperature tomorrow will be equal or lower. Because we believe the opposite things, we can make the following deal:

1. You pay me $100
2. In exchange, I give you a piece of paper that says, "For every 1 degree higher the temperature is tomorrow, I pay you $100."

Congratulations, you just bought a call option.
 

drtro

Active member
216 21
Let's assume you believe that the temperature tomorrow at 5pm will be higher than today's 5pm temperature. At the same time, I believe the opposite: that the temperature tomorrow will be equal or lower. Because we believe the opposite things, we can make the following deal:

1. You pay me $100
2. In exchange, I give you a piece of paper that says, "For every 1 degree higher the temperature is tomorrow, I pay you $100."

Congratulations, you just bought a call option.

So buying calls means you expect the price to go up, and puts are the opposite? And selling puts is the same as buying calls, and selling calls is the same as buying puts?
 

verial

Member
53 4
What's the current account value? :cool:

$5880.

But because I'm starting a new options-trading newsletter, I'm not going to be updating this thread anymore (conflict of interest).

However, if you have any questions about trading price gaps, please ask them here. Basically, gap-trading is a three-step process:

1. Find a gap.
2. Determine the gap type (Area/dividend/exhaustion/amateur: gap will fill; breakaway/continuation/pro: gap will widen)
3. Confirm 2-5 days after the gap, using candlestick patterns, that the stock will indeed go in the direction that the gap implies.

That's the safest form of gap-trading.

The type of gap-trading I used in this thread integrated this type of gap trading with some other strategies, such as sideways strategies that take advantage of increased implied volatility after a gap, which in turn increases the price of options, thereby allowing us to get more profit from writing calls or puts.
 
 
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