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How Warren Buffett Trades Options: The Oracle of Omaha’s Secret Strategy
Warren Buffett is famous for being a master of value investing. He looks for companies with strong, lasting advantages and buys their stocks when the price is right. But here’s something many investors don’t know: Buffett also uses options in a smart and strategic way. While some assume he avoids derivatives entirely, that’s far from…
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The 1-1-2 Trade: Is It Really Worth the Risk? Discover Safer Alternatives
The 1-1-2 options trading strategy presented in my previous article has been gaining popularity among traders, especially in several online communities. But before jumping on the bandwagon, it’s important to understand that this trade may not suit every trader, especially during volatile market conditions. In this post, we’ll explore the origins of the strategy, how…
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How Howard Marks Changed My Approach to Risk in Options Trading
As someone deeply involved in options trading, I recently came across Howard Marks, the co-chairman of Oaktree Capital. His views on risk, laid out in his new video course, were incredibly insightful and made me rethink some aspects of my own strategy. I found many of his points applicable not just to traditional investing but…
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Box Spread – Your Secret Weapon for Risk-Free Options Trading
In this blog post, I will explain everything you need to know about box spreads, which are often considered the closest thing to risk-free options trades. You will learn what a box trade is, why it’s useful, how to construct one, and how to use it for various financial purposes such as generating income, replicating…
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Never Trade Iron Condors Blindly: Here’s How to Actually Profit with This Strategy
Most people’s portfolios don’t have anything that can profit unless the market is going up. Traditional investments, like stocks, need upward movement to generate returns, leaving you with limited opportunities when the market is flat. The Iron Condor options trading strategy offers a compelling alternative by profiting from a lack of significant price movement in…
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Is VXX Going To Zero? A Guide to Trading Volatility Products
The VIX, formerly the Chicago Board Options Exchange (CBOE) Volatility Index, often referred to as the “fear gauge,” serves as a valuable tool for options sellers like us. It captures market sentiment by rising with increased uncertainty and concern, as reflected by the weighted average of out-of-the-money call and put options on the S&P 500.…
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Jade Lizard – A Strategy for a Sold-Off Market with No Upside Risk
Traditionally, neutral strategies such as the strangle or iron condor carry inherent risks on both sides of the market. A substantial move in either direction can be challenging. However, there is a groundbreaking options strategy maintaining a neutral bias while completely eliminating upside risk. It is the Jade Lizard, which allows traders to collect rich…
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The 1-1-2 Bear Trap Strategy: Trading with a 95% Probability of Profit
Today, we’re diving into one of my all-time favorite options trading strategy – the 1-1-2, also called the “112 put ratio” or the “bear trap“. I’ll break down why it’s the greatest trade ever told, its simplicity, flexibility, and how you can use it in various market conditions. The 1-1-2 trade is a straightforward, mechanical…
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Naked Put Nightmare? No Problem! Here’s How to Fix It.
Ever had a put option trade go seriously south, like way deep in the money? It happens, even to the best of us. Picture this: you’ve tried some smart moves, rolled that put option down and in time, but the trade’s still stuck. Feeling the panic vibes? It’s a common struggle among traders. You could…
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ZEBRA – the Best Options Trading Strategy for a New Bull Market?
The ZEBRA (zero extrinsic value back ratio spread) allows you to get close to the same directional exposure as owning 100 shares of stock, but with much less risk. It’s my favorite stock replacement strategy. In contrast to other stock replacement strategies such as synthetic long stock, risk reversal, or LEAPs, the ZEBRA provides substantial…