Gamma Scalping – Volatility Income Generator
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A great way for option traders to generate consistent income in extremely volatile markets (like we are having right now) is called Gamma Scalping. When the market / underlying instrument is making huge moves and swinging around wildly, this is a strategy that thrives – unlike the traditional monthly income strategies such as iron condors, calendars, credit spreads, etc.
Gamma scalping allows a trader to set up a trade that can profit if the market moves either way – and then immediately lock in those profits and ‘re set’ the position to once again profit if the stock moves in either direction. Think of it as a way to day trade without having to pick direction – taking away most of the risks that are normally associated with day trading.
When using this strategy – the trader doesn’t care which way the market will be heading. The trade is set up to profit either way. Up or down – its all good. And the bigger the moves, the better.
Then, when a move has occurred and a profit has been realized in the position, using an easy to follow set of rules, the trader can perform an adjustment that immediately locks in that profit while setting up the position to profit again no matter what the underlying winds up doing. And this can be done over and over again – continually scalping profits out of the trade.
How many times have you purchased a stock or option and wound up actually being right and seeing some profits – only to have the underlying immediately turn around and retreat back to it’s starting position wiping out all the profits?
Gamma Scalping eliminates this. When profits are realized – this strategy allows you to capture them forever. And if the underlying continues the move – or heads back to where it started from – MORE profits continue.
This option strategy is a great tool to have in the stock and option traders toolbox and especially in these extremely volatile times can be a real asset to help generate super sized profits.
And – it’s a really fun way to trade as well.
Next we’ll get into how to choose the correct underlying vehicle to gamma scalp – as well as how to learn a very simple easy to follow step by step formula to set these trades up and then lock in gains and reset them to profit no matter what the stock winds up doing.
