How to avoid the wrong option contracts | Jeff Bishop

After two straight months of heavy buying in the stock market, it appears that we’re ready to pause or even sell-off.

Now, some traders prefer sell-offs because of the volatility and opportunity. However, my strategy works in all market conditions. The way I trade allows me to profit handsomely off small price movements in stocks.

For example, the United States Natural Gas ETF (UNG) is up less than 3% year-to-date. However, my call options are up 200%.

No kidding…

(For some, holding onto winning trades is hard, but that’s the only way you can make the big money.)

Now, it’s not only about knowing the mechanics of the options market… you also have to have the right strategy.

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You can’t just go out and buy a liquid options contract thinking you’ll make money… it just doesn’t work like that. For example, with the United States Natural Gas Fund trade (UNG), I looked at my money pattern

That’s right… just by using those three lines, and knowing the ins and outs of options helped me lock in 100% on the first position… and 200%+ on the second.

That said, a common question I get from traders trying to learn about options is: “Which options should I buy?”

Well, there are several factors that play a role in the price of an option, the big three being: time to expiration, strike price, and volatility.

However, if you want to avoid the wrong options to buy or sell, your focus should be on options volume, open interest, and the competitiveness of the bid-ask spread.

Now, if you’re ready to learn more about options, make sure to get a copy of Jeff Bishop’s latest eBook, 30 days to options trading, right here.

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