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It’s only when it starts to get to a +300 Delta or a -300 Delta that I will want to adjust it. This is how you can build very large positions in the indexes, by doing Theta scalping. You can add positions. For example, it wouldn’t be any problem for us to go ahead and… I’m not short the 47s. I could go ahead and sell a vertical. Let’s say I didn’t even want to do that. I could go ahead and do another 10 contracts on here.
It puts me 351 on Delta. I go ahead and put those on, and then buy 300 shares of the stock, in order to get Delta-neutral. Just like we did with Gamma scalping, I always want to be Delta-neutral. Once I get to 300… I don’t want to always trade, though. I don’t want to be back and forth, like Gamma Scalping. This is a little bit easier, especially for those of you who only have 10 or 15 minutes a day, in order to trade.
You just check your Delta. If you need to go long, you go long. If you need to go short, you go short, and you’re done. You can continue to collect Theta, and you can continue to do vertical trades, all the way up until expiration.
Let’s say I wanted to sell this one. I could go ahead and sell this, too. Let’s say I wanted to do 10 of those. It’s not a huge credit. Actually, I’ll probably spread those out. The nice thing about this is that I can spread these out a little more, too. I can get a 39-cent credit on that, and it almost brings me back to Delta-neutral.
If I did both sides, maybe I wouldn’t even have to buy the stock. I would be about 203 Deltas, just by putting on those two positions. I keep adding to my income, as we get closer and closer to expiration.
Then, if I need to adjust – let’s say the price goes up a little bit, by 50 cents. Now we’re 344 Deltas short. All I have to do is come in here, buy 300 shares, and I’m Delta-neutral again. All the while, collecting that very important Theta, which gives me my daily income.
If you want to trade big, and make a big monthly income, this is the way to do it, guys. Just be careful that you do it on an index that has very liquid options. I like it on the QQQs, because during the day – right now, the option market is closed, so the spreads are a little bit wide, here. During the day, they’re very tight. You can borrow the stock anytime you want, and it’s an index fund.
Remember, if you’re doing stocks, you don’t want to drop like this. You don’t want to do it on individual stocks. You want to do it on indexes and ETFs.
Okay, guys. That’s it for Theta scalping. You can trade as big as you want. I would build a position. I wouldn’t go into really big positions right away, but if you want to, you can start building positions over time, adding to – this is another thing, too. You can add to your positions. Maybe start out with 10. 10 of these, 5 of these. Then you can add another 5, another 5, another 10. Every other day, go in, take a look at your current price situation, and keep adding to it.
Right now, if we hang onto this until September, we have $5561 that we can collect. This isn’t the only one that we have. I also have a position on the SPY, which I just started building. This is a December position. You wouldn’t think that anything that far away would start making money, but I’ve already started making money on this position.
You can do these far enough ahead. In fact, I would suggest, the farther ahead you do them, the better. Not too far. I’m talking about September. Right now, we’re at the beginning of August, so you could do some in September, October. If you have options in November, you can do November, and December. If you want to trade big, you can do all three months. September, October, November.
I got these in December. That’s a little far out, but I want to see how it does. I actually only put these on a few days ago, and I’m already making money on it. As long as the Theta is positive – the Theta’s not huge right now, but the closer we get to expiration, it’s going to continue to increase, every single day.
That’s what I really want to happen. I want this Theta to be increasing every single day. If we take a look at the Trade tab, we have 134 days until the December expiration. I’m just starting to build my position. I want an early position. I took in just a few contracts, which I’m going to be adding to, every week. As the price changes, I’m going to be adding to my position. I’m going to be carrying this all the way through, right to the December expiration, and make a fairly good income for that month.
You can do this for every single month – October, November, December, if you’re in August. If you’re in December now, you can go with January, February, March. If you’re in March, you can go with April, May, and June. You can carry these out for a number of months.
Don’t be afraid to do it too early. If it does go against you, you don’t want to adjust too much, but you can start out with a small position, and then build your position over the coming months, in order to generate that large income.
Alright, guys. That’s it for today. I hope you enjoy this. This is the way to trade. You can get a huge monthly income here. Build your position out over time, and start generating that Theta income. I think you’re going to be really happy with this Theta scalping strategy. It’s really going to help you out, keep you Delta-neutral, and help you in collecting that Theta, every single day.
Trade with confidence.