In This Chapter
Gaining with up or down moves
Identifying neutral approaches
Monitoring the Greeks
Only one thing is for sure when trading: On any given day the market can move three ways — up, down, or sideways. If knowing exactly what’s next is your trading goal, you should find a way to shift your thinking. Managing your risk is the first and foremost rule of trading.
The strategies covered so far have only scratched the surface of option benefits. It’s a pretty deep scratch, because a lot of the methods described in this book will significantly decrease risk. But they’re still only on the surface. This chapter introduces a trading approach unique to options: profiting without a directional outlook for the underlying stock. By incorporating delta and gamma analysis into your approach, you can apply strategies that make money whether the market goes up or down. Part of this strategy includes adjusting trades so you can take some profits off the table while gearing up for the next ...