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David Jaffee

Options Trading for Dummies

The best options trading strategy is not a mystery. 

Both beginner and advanced traders can learn how to be consistently profitable when selling options in a relatively short period of time.

In this article, David Jaffee of BestStockStrategy.com provides a summary of his options trading strategy. 

This strategy should allow even beginner traders to win up to 98% of their trades. 

Keep reading to learn options trading for dummies. 

Should you buy or sell options? 

When trading options, you can either buy options or sell them.

In general, David Jaffee prefers to sell options because selling options offers a higher probability of profit.

Depending on which options you sell, it’s not uncommon to win up to 98% of your trades.

When you buy options, your probability of profit is going to be much lower.

As a result, when you win, you are going to have to make significantly more money to compensate for the losing trades. 

When you sell options, it’s similar to turning yourself into a casino or an insurance company.

The probabilities are in your favor when selling options, and you can better manage losing trades. 

Beginner Options Trading Example 

Around August 20, 2021, David Jaffee provided an example of options traders for beginners by focusing on Amazon. 

At the time, Amazon’s 52-week high was about $3773 and the company reported earnings about three weeks prior. 

After earnings were reported, Amazon stock fell about $230 and was trading around $3250.

As a result, Amazon was trading around $500 off its recent 52-week high. 

In that situation, David Jaffee, who is frequently recognized as the #1 options trading coach,  recommended selling put options on Amazon.

By selling an out of the money put option, you agree to buy stock, and collect premium, at a lower price than it is currently trading at.

You also get to choose which strike price you want to sell. 

For example, if you agree to buy Amazon at $2900, then you will collect significantly more money than you will if you agree to buy Amazon at $2500 because you are agreeing to buy Amazon at a price that is $400 higher.

Learn How to Manage Risk When Trading Options 

David Jaffee recommends selling options that are further out of the money because it reduces stress and mitigates the likelihood that the position will be challenged.

In the example above many people would prefer to sell the $2900 put option and receive about $15 per share, or $1500 per contract.

However, David Jaffee would feel much more comfortable selling the $2500 put option and collecting about $400 to $500 for every contract sold. 

The reason for this is that the $2,500 strike will get challenged much less frequently. As a result, there is less stress when trading that option. 

Which Stocks Should Beginners Trade? 

David Jaffee keeps a small watchlist of about 15 stocks and gets comfortable with their trading ranges.

Once he recognizes that one of those stocks is trading at the low end of its range, he will then sell a put option. 

If one of those stocks is trading at the high end of its range, David Jaffee will then sell a call option.

David Jaffee has taught this options trading strategy to more than 1,500 students, and many have found options trading success

Call Options vs. Put Options for Beginners 

With call options, David Jaffee recommends being more careful. 

Call options have a higher probability of getting challenged because the market has a tendency to go up more than it goes down.

As a result, if you were to sell a put option that is about 10% to 15% out of the money, David Jaffee recommends selling a call option that is about 20% out of the money.

If that call option ends up getting challenged, you can feel more comfortable because that stock is likely to, eventually, pull back and fall below the strike price.

The velocity of risk is more to the downside than it is to the upside, which means that a stock might go up more than it goes down, however when it goes down, it tends to go down extremely rapidly. 

When a stock is going up, it tends to make a “staircase” pattern where it goes up slowly. As a result, despite the call options getting challenged more frequently, call options also tend to be easier to manage. 

There is a saying in the market that the bull takes the stairs up, but the bear jumps out the window.

That’s why when you sell a put, you are able to collect more premium than you are when you sell a call (because the velocity of risk is to the downside).

If you sell a call option, even if that position gets challenged, then as long as you keep rolling out that position and collecting more premium, you can feel confident that it’s just a matter of time before you make money in that position.

Learn How to Trade Options for Dummies 

This article provides a superficial overview to options trading for beginners. 

David Jaffee offers a comprehensive online options trading course that covers every aspect of options trading in-depth. 

Both beginner and advanced traders can find success by implementing David Jaffee’s options trading strategy. 

Visit BestStockStrategy.com to learn how to trade options for dummies and receive $400 of free options trading training materials.

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David Jaffee

Options Profit Calculators (Are they Useful?)

If you’re new to trading options, then you’re probably eager to learn how to earn profits consistently.

When it comes to calculating how much profit you could potentially make trading options, you’ve probably heard of options profit calculators.

Based on the formulas offered through these calculators, it can be tempting to spend time deciding which options contract will maximize your profits.

If you’re having trouble deciding which trades to enter, check out how David Jaffee teaches his students how to win up to 98% of their trades!

How to Calculate Options Profit

Using an options profit calculator can help you fully understand the potential gains as well as potential risks that accompany a trade.

There are many ways to calculate profits for different options trading strategies.

Let’s look at potential gains made after buying a call option contract. 

To calculate the potential options profit, we need to know:

  1. Premium paid for the options contract (the price of the option)
  2. Strike price of the option.
  3. Current stock price.
  4. Number of contracts bought.

Let’s say 2 months ago you bought 3 call options (each contract is 100 shares) for Company Z . The option’s price was $5. The strike price of the option is $30. The current stock value for Company Z is $45 per share.

Options Trading Formulas

1.) Calculate your total investment.

Multiply the option price / premium paid by the total number of shares purchased – 300 shares in this scenario.

$5 x 300 = $1,500

2.) Calculate your total current stock value.

Multiply the total number of shares with the current stock value.

300 x $45 = $13,500

3.) Calculate the total strike price value.

Multiply the total number of shares with the strike price value.

300 x $30 = $9,000

4.) Calculate your profit.

Profit Formula = Total current stock value – total strike price value – total investment

Your Profit = $13,500 – $9,000 – $1,500 = $3,000.

Keep in mind that this calculation applies only if you decide to exercise these 3 options before expiry.

Note that when calculating profit / loss for positions that are not assigned / exercised, it’s very important to keep track of the current market price of the option, and compare it to the price of the option when you entered the position.

Are you interested in studying the most profitable options trading strategies that can increase your income? 

Discover why David Jaffee’s online course makes him one of the internet’s top options trading coaches!

Drawbacks of Using an Options Profit Calculator

If you’re using probability calculations for options profit calculators, these numbers are based on the assumption of stable implied volatility values. 

If the market is volatile, it could significantly change the predictions of the options trade.

It is far better to enter good trades than spending time calculating potential gains. 

As someone that is focused on making profit, options profit calculators can be very distracting.

David Jaffee prefers his students to work on their discipline, patience, mindset and habits.

Other Considerations before using Options Profit Calculators

If you’re learning to trade the way David Jaffee’s teaches his students (by selling far OTM options), very few of your positions will end up getting challenged.

Most brokerages also explicitly show you the live profit and loss for each position in your account. This removes the need to use an options profit calculator.

David Jaffee believes that people should trade a strategy that is as simple as possible and focus primarily on selling naked puts and calls, and / or vertical credit spreads.


Once a trade is made, a closing trade can be entered as a GTC order that will automatically close the position once the sold option can be bought back for 30% – 50% of the original price that it was sold for (therefore allowing the trader to keep 50% to 70% of the premium).

In the event that a position is challenged, the trader can roll the position for a tiny credit, or debit, and use the time premium to significantly reduce the risk of the challenged position by rolling the strike price of the challenged position to one that’s more favorable.

Final Thoughts

It may feel intimidating to enter a trade and not know your potential profits or losses.

As a beginner, it may be best to enter a closing order, at your preferred profit target, immediately after opening a new trade rather than spending time using an options profit calculator.

Want to learn options trading strategies that can make a profit consistently? 

Learn how David Jaffee’s options trading course has taught over 1500+ students how to trade successfully!

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David Jaffee

How Do Calls and Puts Work?

When it comes to options trading, there are a few keywords to know. 

You will hear a lot about calls and puts as you learn to trade options and develop your strategy. 

But how do calls and puts work? 

David Jaffee of BestStockStrategy.com breaks down exactly how calls and puts work for his students, including the best strategy for options trading. 

If you find yourself searching for puts and calls for beginners, keep reading to learn how calls and puts work with examples of each. 

Call Option Meaning

The value of an option is connected to the price of the underlying asset. 

In many cases, the underlying asset is a specific stock. 

A call option gives the buyer the option to buy 100 shares of the underlying stock, but they are not obligated to do so. 

The call option buyer can purchase the underlying security at the specified price, known as the strike price, on or before the expiration date. 

A call option seller, or writer, can generate income by selling options and collecting option premium. 

The call option seller collects premium upfront from the buyer, which they keep whether the option is exercised or not. 

How does a call option make money?

For a trader who buys a call option, call options provide an opportunity to purchase a desirable stock at a lower price, while also providing favorable leverage when compared to owning stocks. 

If a call option is in the money, the stock price is higher than the strike price. This means the option buyer can purchase 100 shares of the specified stock at a price lower than the current market value. 

The call option buyer can also make money by selling an in the money option (and closing out the position) before its expiration date. 

For a trader who sells a call option, profit is earned by collecting option premium. 

If the option is not exercised by the buyer, the seller keeps the option premium as profit. 

If the option is exercised by the buyer, the seller may still earn a profit depending on the current market value of the stock. 

Call Option Example

A call option gives the buyer the right to purchase 100 shares of Amazon stock at a strike price of $3,250 per share with an expiration date in three months. 

If the call option buyer chooses to hold the option contract until expiration, they can purchase 100 shares of Amazon stock at the strike price.

The call option buyer also has the option of selling the contract before the expiration date.

In this example, the option seller may collect option premium of $5 per share, totaling $500 per contract. 

The option seller keeps the entire $500 option premium, and David Jaffee has taught more than 1,500 students how to earn a profit selling option premium. 

The call buyer will profit if the stock is trading higher than the strike price, plus the premium paid for the option, at the time of exercise. 

The call seller will profit if the option they sell is able to be bought back at a lower price than they sold it for. 

Put Option Meaning

Like call options, the value of a put option is linked to the underlying asset.

When a trader buys a put option, they have the right to sell 100 shares of the specified stock at the predetermined price (strike price) by the expiration date. 

Investors often use put options to speculate or as part of their risk-management strategy.

For the option buyer, a put option can help protect against downside price action and prevent losses on a stock by allowing them to sell their stock at a predetermined price (the strike price). 

Put option sellers generate income by collecting option premium in this scenario as well. 

Put option buyers have the option of selling the contract before the expiration date, and put option sellers collect premium regardless of the outcome of the option contract. 

How does a put option make money?

In general, as the value of the underlying asset falls, or volatility increases for the underlying asset, a put option will increase in value. 

If the price of the underlying asset increases, volatility decreases, or the option gets closer to expiration, a put option loses value. 

The put option seller is able to keep the entire premium and make money trading options if the option expires worthless (or it’s bought back at a lower price than it was sold for). 

Put Option Example

If the same 100 shares of Amazon in the earlier example are part of a put option, the option buyer pays a $500 option premium. 

If the price of Amazon falls below $3,250, the option buyer can short sell the stock at the higher strike price. 

The put option seller collects the $500 option premium, and they can keep the entire premium, but they can lose money if the market price of the stock falls too far below the strike price.

The reason the option seller can lose money is that the premium collected may not be enough to compensate them for the fall of the underlying stock.  

Should you buy or sell calls and puts?

David Jaffee of BestStockStrategy.com recommends selling option premium as a profitable option trading strategy, as long as it’s done correctly.  

While there is a potential for higher profits by buying options, selling options offers more consistency and less risk. 

Learn more about how calls and puts work, including the best options trading strategy at BestStockStrategy.com and earn $400 of free training materials. 

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David Jaffee

Top 3 Tips for Trading Options Profitably in 2021 & 2022

Are you ready to get back on track with trading options in 2021 and 2022? 

Or maybe you’re an experienced trader that wants to revisit some basic concepts?

You may already know some options trading mistakes you should avoid, but what about things you can do to increase the probability of being consistently profitable while trading options?

Read on to find out the top tips for trading options profitably in 2021!

Trade Small

Make sure your trades are small. As an options trader, it may be tempting to use all your buying power, especially when trading naked options.

Using all your buying power is an extremely risky approach.

Before you know it, a few bad trades can wipe out months of profits.

Since options use significantly less buying power when compared to buying shares of the underlying security, the general tendency is to overtrade and trade more contracts than you should.

By doing this, you’re increasing your risk of being placed into a margin call if the trade does not go your way.

Would you like more tips on how to trade options profitably in 2022? 

Then check out a review of David Jaffee’s options trading course and how it can help you win up to 98% of your trades.

Choose Stock Options with High Liquidity

As an options trader, you should choose high quality, liquid, underlyings, and make sure the spread between the bid and ask is small.

The illiquidity of your stock options can affect the profitability of your trading strategy because there may be significant slippage when trading and it may be difficult to roll / manage an illiquid underlying.

The true power of options lies in its leverage, flexibility and control to set up positions so that you create a high probability of profit.

Do you want to learn one of the best option trading strategies?

David Jaffee’s options trading course will teach you how to develop this skill set!

Sell Both OTM Puts and Calls

Novice options traders are sometimes way too focused on how to make money trading.

They tend to sell strikes that are too close to the current market price of the underlying stock.

Additionally, novice traders tend to trade puts, or calls, but rarely both.

It’s best to trade BOTH puts AND calls.

If you believe that a position is oversold, then it may be best to sell a put.

If you believe a position is overbought, then it may be best to fade that move and sell an OTM call option.

As long as the stock price stays within a certain price range (above the OTM put and below the OTM call option strike prices), the options seller will be able to reap maximum profits. 

For 1 put option and 1 call option, the maximum profit will be 100 x (net credit received from selling the OTM options).

Even so, David Jaffee does not recommend selling both puts and calls at the same time.

Instead, he believes it’s best to sell a put only when the stock is oversold, and a call only when a stock is overbought.

If the stock price ventures beyond the strike price range, there’s still a breakeven price range that will allow the seller to make a profit.

Any movement beyond the breakeven price range will result in losses.

How can you minimize the risk of this strategy?

Always choose strike prices that are far out of the money when selling options so that you have an adequate safety net.

Are you looking to make 2021 and 2022 a success?

Then you may want to take a closer look at why David Jaffee’s options trading course is highly rated!

Conclusion

If you’ve started options trading on your own, you’ll realize that there are some strategies that are more profitable than others.

Trading small, choosing options with high liquidity, and selling OTM puts and calls are all part of David Jaffee’s simple options trading strategy that can help you win up to 98% of your trades.

Do you want more amazing advice related to options trading? 

Visit BestStockStrategy.com and enter in your email address to receive $400+ worth of valuable free options trading information.

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David Jaffee

Stock Options Trading

The probability of buying a stock at one price and selling it for a higher price is about 50/50.

Even if you do succeed with stock options, you’re only likely to earn about 7% a year before taxes.

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David Jaffee

Best Investment Strategy

The best investment strategy will never be a get-rich-quick scheme.

David Jaffee of BestStockStrategy.com has taught more than 1,500 students how to be patient and disciplined by structuring their investments and trades to have a high probability of profit.

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David Jaffee

#1 Options Trading Education

Do you want to learn how to trade options?

Do you even know where to start?

You may have heard that options trading is a great way to supplement your income, and that is true.

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David Jaffee

Can You Get Rich from Options Trading?

Most people want to make a million dollars but not very many know how to accomplish this goal.

David Jaffee of BestStockStrategy.com has taught more than 1,500 students how to make money trading options.

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David Jaffee

How to Trade Options

Many people want to become traders to earn financial freedom and independence. The best way to trade isn't actually to trade stocks, rather it's to learn how to trade options so that you can earn additional income while reducing risk.

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David Jaffee

Trading with David Jaffee

Trading with David Jaffee has helped many people. There is a large interest in trading options and increasing income. Unfortunately, a lot of individuals stop pursuing these interests before they even try. Concerns about the unknown, fear of failure, and misinformation leave people confused and wondering where to begin.