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.
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.
When gamma scalping – the trader doesn’t care which way the market will be heading. The trade is set up to profit either way. Up or down – its all good. And the bigger the moves, the better.
Then, when a move has occurred and a profit has been realized in the position, using an easy to follow set of rules, the trader can perform an adjustment that immediately lock in that profit while setting up the position to profit again no matter what the underlying winds up doing. And this can be done over and over again – continually scalping profits out of the trade.
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 Trading 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.