Gamma Scalping: Surfing Volatility For Steady Profits
A great way for option traders to generate consistent income in extremely volatile markets is called Gamma Scalping . When the market / underlying instrument is making huge moves and swinging around wildly, this is a strategy that thrives – unlike the traditional monthly income strategies such as iron condors, calendars, credit spreads, etc.
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.
If the market goes up – that’s great. If it goes down – that’s great too. When utilizing this trade, it doesn’t matter what the market winds up doing. We just want it to move. And moves that are bigger make it 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.
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.
Once a gain is showing on the trade – through gamma scalping you can lock that in. And once again, the method used to lock that profit in, positions the trade back to it’s starting point – where if the underlying continues moving in the same direction – or stops and returns back to where it came from – MORE profits can continue.
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 along with being profitable – it’s actually quite an enjoyable way to trade too.
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