Jonathan Rose's video: Can You Make 500 on Your Money with THIS QQQ Option Trade optionstrading

QQQ Nasdaq Option Trading Strategies - Unusual Options Activity in Nadaq QQQ Trade. Get the FREE Correlation Tool: Quickly find stocks to trade and gain an edge with one click! 👇 https://mastersintrading.com/correlation/ FREE weekly MIT Digest: Gain an edge by getting the most timely tips and strategies possible 👇 https://mastersintrading.com/digest/ BENEFITS OF TRADING OUT-OF-THE-MONEY (OTM) OPTIONS Today, we’ll explore some valuable trading techniques that can potentially help you increase your profits while minimizing risks. In this video, you'll discover how out-of-the-money, or OTM, options work and why they are a powerful tool in a successful trader's arsenal. Intrinsic Value and Extrinsic Value First, let's clarify the difference between intrinsic value and extrinsic value and how it relates to In the money and out of the money options. Intrinsic value is the value that an option has if it were exercised immediately. On the other hand, extrinsic value is the value that an option has above its intrinsic value. In other words, it's the value that's derived from the amount of time left until the option's expiration date. In the money options have intrinsic value, as they have already reached the strike price and are worth exercising immediately. In contrast, out of the money options do not have intrinsic value, as they have not yet reached the strike price. Out of the money options have extrinsic value, which can be broken down into two components: time value and volatility value. Time value is the value that's derived from the amount of time left until the option's expiration date, while volatility value is the value that's derived from the potential for the underlying asset to move in a particular direction again. So, why are OTM options such a powerful tool in a trader's arsenal? Well, they provide a leveraged approach to trading, meaning that you can take advantage of small price movements in the underlying asset while risking only a fixed amount of capital. By trading out of the money options, you can potentially earn a significant profit while minimizing your risk. Gamma Scalping: The Key to Managing Time Decay and Maximizing Profits Gamma scalping is our favorite method for managing options trades at Masters in Trading. Gamma represents an option's sensitivity to changes in the price of the underlying asset. OTM options have a higher gamma than In the money options, which means that they are more sensitive to changes in the price of the underlying asset. By using gamma scalping, traders can take advantage of these price movements while minimizing their risks. By using gamma scalping and taking advantage of changes in volatility, traders can adjust their positions to maximize their profits. But remember, when trading out of the money options, it's essential to have a solid understanding of position management techniques like gamma scalping and to monitor the option's time and volatility values. Gamma scalping is particularly useful when trading options that are affected by time decay. Time decay, also known as theta, is the amount of time value that comes out of an option's premium on each day. This means that options lose value as they get closer to expiration. To make back lost theta, traders must scalp gamma by buying and selling options to maintain a neutral delta position. GET THE FREE MIT DIGEST ↳https://mastersintrading.com/digest/ More from Jonathan Rose: ↳ https://mastersintrading.com/ WRITE TO US! ↳ support@mastersintrading.com ✅ Let’s connect: Twitter – @Mastersintradng https://twitter.com/Mastersintradng Our Success Stories: https://mastersintrading.com/success/