If you think a company is about to pull back, it doesn’t always make sense to just sell naked puts. Today, I want to discuss some additional undefined risk trades I put on even if I’m a little bearish. Put sales are my favorite strategy because the trade setup and management are simple. If I’m wrong, owning shares of the underlying gives me a second chance because shares never expire, and I consider them an asset. This doesn’t mean ‘bag holding’ a loser forever; I’m simply pointing out that if you are wrong in the short term, you have a second chance with a put sale that goes wrong. But what if you think the company is going to pull back? You look at the moving averages , the stock is currently at resistance , or you see a bearish candle pattern . Selling a naked put doesn’t make sense if you have a bearish bias! Instead of waiting for a pullback, you can set up a trade that benefits as the stock pulls back. In other words, set up a trade that benefits from theta decay and offers a bonus if the stock falls into the “tent” of the risk curve. Let’s take a look at the risk curve for some of my favorite trades when I have a bearish bias. To keep this article semi-short, I’ll break down the specifics in a separate article with trade setup and management. I recorded a video companion for this blog: Let’s start with an introduction, and I’ll discuss how I think about these trades. If you have insights, I’d love to hear from you in our Discord , or shoot me an email ! Short Put: When we sell a put we are 100% bullish on the stock. In this example we are selling an 18 strike put and collecting $20. This is what this trade looks like on the options chain in Tasty Trade As a quick reminder, I like to sell puts outside the expected range (the brown bar in the middle) and past the standard deviation (the blue dotted line), and I want to collect 1%, so the 18 strike for at least $0.18 for each 30 days. This risk curve shows that if HOOD goes up, the max profit is the premium you collected. As the stock goes up, this trade has a 93% probability of hitting a 50% profit target, which is $10. You will only make $20 no matter how high the stock goes up. The max loss looks intimidating because if HOOD stock went to zero, you are obligated to buy those 100 shares. You can see the buying power is about $360 in a margin account. Put Ratio Spread: A put ratio spread is when you buy 1 long put and sell 2 (or more) short puts. The ratio is generally 1:2, but slightly more advanced ratios like 1:3 or 1:4 add more risk. Keep in mind you can sell more than one ratio, so 2:4 depending on your account size and the share price. Size your trades evenly for the best risk management. This is what it looks like on the options chain. We are buying the 21 put and selling 2 20 puts. Do you see how this is right at the expected range (the brown bar) and we are still collecting over 1% of the strike? Of course, we are not collecting the $0.47 credit we would if we just sold the 20 puts, but let’s look at the risk curve. Notice that unlike a short put, we now have a "tent" between 19-21 in the share price. Instead of the $27 credit being our max profit, we see a max profit of $127 because we have a put debit spread mixed in with our sold put. This is what the spread looks like. We're paying a $20 debit to make a max of $80. The put ratio spread is an easy way to add a little hedge to a short put because we have added a put debit spread right above the short put sale. 1-1-1 Put Spread: But what if you are even more bearish and you still want to start a position? Please keep in mind HOOD's share price is pretty small. The reason I'm pointing this out is because a 1-1-1 can pay higher credits than today’s example. Do not sleep on this trade. Let me show you the setup, then I will tell you a cool way to convert this into an even better trade on a pullback. This is what the options chain looks like: The short put is still at the expected range, and you are adding a put debit spread like we saw with the put ratio spread, but all trades are at different strikes. I only sell 1-1-1s, meaning I want a credit for this trade instead of a debit. I personally like to have a strike in between my two short puts. If you sold the 21 strike instead of the 20, you'd get a $16 credit. Max profit here is $108, still with a max loss owning shares at $20 a share less the put spread and credit we received. Let’s look at the risk curve before you ask why I would take a trade that only pays an $8 credit. If HOOD pulls back between 20-22 a share, you make $100. If HOOD bounces, you keep the credit received. This trade uses $575 in buying power. If you were to move the 20 short put to the 21 (meaning you have a 23, 22, 21 strike), it looks like this: Do you see the profit tent move from 21-22? You can make $120, but the size of the tent shrunk. The risk here is the same as selling a short put. The profit is the credit of the debit put spread to the downside. Justin, 'why would you do this for such a small credit?' Because if HOOD drops and falls into that profit tent, I could sell another put for a really nice credit and create the next trade that I like to set up, the 1-1-2! 1-1-2 Put Spread: A 1-1-2 has two short puts instead of just one. This means you have two short puts, meaning if left unmanaged, you are agreeing to buy 200 shares. So keep in mind the worst-case scenario. This is what the options chain looks like. We sold 2 19 puts (right at the standard deviation) and created a put debit spread at 22-21, right between the 20 and 30 deltas and at the expected range. If you notice, we collected a $31 credit. We have great probability of profit, and we can make $131 on this trade. It requires $910 in buying power since we have 2 short puts. You can skew this trade to have less delta. As it’s set up, you get nice theta decay. This is the risk curve. The profit tent is between 19-21 per share. If HOOD bounces, you keep the credit. If the stock goes up, you still benefit from the 3.57 in theta decay! These are a few of the trades I use when I anticipate a stock pullback. Each strategy offers unique advantages and can be tailored to fit your risk tolerance and market outlook. By adding these trades into your tool belt, we better navigate bearish conditions while still benefiting from potential upside. If you want to dive deeper into these strategies or have any questions, join our Discord community where we discuss these topics in more detail. Happy Trading, Good Kids! $Maxwell If you need more personalized help with your trading, you can schedule a 1:1 intro call with me through my Calendly link  click the image below!

This weekend, I'm giving you a taste of something new: an inside look into what I see and what I'm thinking. Remember, this is not trading advice but an educational resource to help you build your own trade ideas using the wisdom and experience I've gained over the past couple of decades in the market! I'm I sharing my insights on the stock market with a little more bias that I think will make you money or help you learn how I've built wealth. My goal is not for you to follow my trades blindly but to help you learn from my experiences. Weekly Charts Update Spy- Weekly Chart I'm not bearish on SPY; I'm simply stating why I'm not adding too much risk. The RSI is showing we're overbought, this is a wave 5 on the weekly, and we are really extended from the moving averages. SPY is up 20% this year. You can see the obvious decline in volume, which is normal because of the summer. QQQ Weekly Chart Tech is outperforming SPY by an additional 5%. QQQ is up about 25% so far this year. Keep in mind, QQQ's top holdings are 8% in AAPL, MSFT, NVDA, and 5% in AVGO, AMZN, and META. So 40% of the index consists of those six companies! With tech earnings coming up, the bar just gets higher and higher for these giants. Even if the companies keep doing well, the law of large numbers is a headwind. I don't mean to sound bearish. I'm cautious and looking to collar my tech holdings. Collars or super collars are a GREAT idea if you have 100 shares! IWM Weekly Chart I've been saying for the last couple of months IWM (small caps) will benefit from a rate cut as these small companies use debt in their company to grow. We are starting to see the breakout. If you have no exposure consider buying a dip? Do you notice how resistance becomes support? look at the bold purple lines. GLD Weekly Chart I left that morning star reversal (the purple circle) right off the 100 and 200 on this chart because LOOK FOR THIS ON OTHER CHARTS!! TRADE IT IF YOU LIKE MONEY. ok enough yelling but i get so darn excited. READ THIS BLOG ON MY FAV PATTERNS! Please look at the consolidation of GLD here (in between the two red lines). Look at what RSI, it moved from overbought to more in range just from sideways movement. Will the purple squiggle play out? I think GLD could be a good bullish trade with fears of a possible recession? TLT Weekly Chart I've been bullish on TLT for months. I've written about it in every Good Kids Only newsletter. When TLT pulled back last week i bought more right off the 10EMA... There is a weekly 100 moving average right on top of us, there could be some resistance but I expect TLT to continue going higher as rates get cut. Here's a few interesting charts with an explanation on what I see MCD - Last time MCD hit the weekly 200 was in 2020. Is this a good time to try a bullish swing trade? Check on smaller time frames and you'll see a morning star reversal on july 8,9,10.... You can probably figure out I'm in bullish (with a stop of course). NUE - how many times has nucor hit the blue line and bounced? Granted it actually closed below the blue line a couple times it's retaken the trend. The only problem is earnings are coming up. Maybe a defined risk trade? SPYD- Will there be a rotation to dividends for fixed value investors when SGOV stops yielding as much? Is this a buy the dip opportunity? The first trade I'm showing is a monthly candle. The second trade was a breakout, but now it's a buy the dip if you aren't in. This week, I'm looking at banks reporting earnings. On Friday, we saw reports from JPM, WFC, and C. This gives me a good idea of what to expect this week. I know volatility was reduced for all the banks after Friday, but that's alright. I don't love C or WFC because C has so much international exposure, and WFC opening all those fake accounts just rubs me the wrong way. Besides my personal bias that Jamie Dimon is a bad@$$ CEO, I also look at the Price to Book ratios of banks to figure out which ones I'm most interested in selling puts on or looking for opportunities. You know I like support and resistance levels and moving averages too. Here's what I see in FINVIZ for banks reporting this week. Bank P/B JPM 1.84 WFC 1.2 C 0.65 PNC 1.49 BAC 1.23 RF 1.22 USB 1.35 ALLY 1.15 SNV 1.39 FNB 0.86 OZK 0.99 If you can find a low price to book and see a good trade: Take it? I am... Other trade ideas for this week UNH reports this week. I know they had some security issues, and I know it's an expensive share price. I also know how many people use them for insurance, and I will look to get back in after earnings. SCHW - Although I didn't like their login issue, this is a good company with a lot of assets under management. I'll be looking for trades AFTER earnings. Amazon Prime Days - Is there a trade here? I know the market is forward-looking. I understand people are really smart and have already thought about this. I still want to watch Amazon this week as it’s having its 8th Prime Day. I quickly looked back since 2015 when AMZN started having Prime Days, and honestly, the last few years have been bullish, but the market has been pretty bullish too. With Amazon at ATHs, I’m not looking to add more (I have a lot of AMZN shares). I thought this was interesting and wanted to share. AMZN Monthly with Prime Days AMZN weekly with the last three prime days In terms of 'news' there isn't too much coming up this week. Can I end with a small rant? Of course I can; this is my post. There's a big difference between listening to the news for relevant information and reacting to the news. When people say they don't pay attention to CPI (or news) and just trade their plan, that's just ignorant. Do we know how the market will react to good or bad news? NO. But is it important to understand what rising CPI means to the market? Ask everyone who lost their accounts during this last rate hike. Please pay attention to the market cycles and news. Do NOT REACT out of FEAR, but keep yourself informed. With that, I'll see you next Sunday. Happy Trading Good Kids Mr $ Maxwell If you enjoyed this blog you should subscribe . We share real time updates all for free in our discord . I understand the stock market can feel intimidating and complicated, if you want some extra support and guidance, I help people skip levels, schedule a free discovery call with me . Lets talk stocks and see if I can help you! Click on the image below and setup a time that works for you!

Financial literacy is the key to unlocking a world of opportunities. Today, I’m excited to share my favorite technical patterns. In stocks the word technical is just a fancy word for looking at a stock's chart. These chart patterns have made me a LOT of money. For all the pure math-based traders out there, open your minds and realize that charts, moving averages , and support and resistance levels are powerful tools that can enhance your confidence in math-based trades Ready to level up your trading game? Imagine having your TradingView charts look exactly like mine! I've put together a FREE, step-by-step guide that shows you how. Don’t miss out—grab your copy now! 👉 Adding Moving Averages to TradingView the GKT way As a contrarian trader most of my favorite patterns are reversal related. Meaning if we get a signal a stock is about to reverse we can setup a trade. I think by combining high probability math based trades with these patterns you gain an edge in the trading world. Here are 7 of my favorite patterns to make money with real examples. You'll now understand some of the reasons I take a trade in discord ! 1. Double Bottom The double bottom is a bullish reversal pattern that signifies a strong level of support. It forms after a downtrend, indicating that the price is likely to rise. Identification: Two distinct lows form at roughly the same price level. There is a moderate peak between the lows, creating a “W” shape. Volume often increases on the second bottom. Why I Like It:  The double bottom is a reliable indicator that the downward momentum is exhausting, and buyers are taking control. It’s a clear sign to consider buying. Wait for a neckline retest. Trying to catch that second bottom has cost me a lot of money! 2. Double Top The double top is a bearish reversal pattern, marking a resistance level where the price struggles to break through. It usually signals a potential downward movement. Identification: Two distinct highs form at roughly the same price level. A moderate trough forms between the highs, creating an “M” shape. Volume often decreases on the second top. Why I Like It :  Just as the double bottom helps identify support, the double top helps spot resistance. It’s an excellent pattern for selling or shorting opportunities. Wait for the actual breakdown before you go short, remember the blog I wrote on support , you want to make sure it doesn't bounce and turn bullish! 3. Morning Star Reversal The morning star is a bullish reversal pattern that appears at the bottom of a downtrend. It consists of three candles and indicates the start of an upward trend. Identification: A long bearish candle followed by a small-bodied candle (indicating indecision). The third candle is a long bullish candle, closing above the midpoint of the first candle. Why I Like It:  The morning star is a powerful signal of a potential trend reversal, offering a clear entry point for bullish trades. It combines price action with market sentiment, making it a strong indicator. Wait for the third candle to close, you can setup a limit buy for the breakout. I loke to look for morning star reversals on moving averages! See that picture above? that's MONEY! 4. Evening Star Reversal The evening star is the bearish counterpart to the morning star, appearing at the top of an uptrend. It signals a potential reversal to the downside. Identification: A long bullish candle followed by a small-bodied candle. The third candle is a long bearish candle, closing below the midpoint of the first candle. Why I Like It:  The evening star is a straightforward pattern to identify and a reliable signal for potential bearish moves, helping traders take advantage of upcoming downward trends. Like the morning star you want to see the third candle close. I really like these when the stock is already high! 5. Head and Shoulders & Inverted Head and Shoulders The head and shoulders pattern resembles three tops or bottoms where the middle resembles a head with two shoulders, indicating a shift from bullish to bearish trends (or vice versa in the inverse pattern). Identification: A peak (shoulder) followed by a higher peak (head) and then another lower peak (shoulder). A neckline drawn across the two troughs. Why I Like It:  I like both the inverted and regular head and shoulders. If you see this setup it's a powerful pattern because you have 3 times where the stock failed. It is useful for identifying major market turning points. As I have said wait for it to setup before you jump in the trade. 6. Pennant Patterns Pennant patterns are compression during a continuation pattern. Think of these as a compressed spring ready to explode. They are formed during strong trends. Identification: A sharp price movement (flagpole) followed by a several candles that keep getting smaller making a small symmetrical triangle (pennant). The breakout occurs in the direction of the preceding trend. Why I Like It: Pennants are one of my favorite quick trades. I've made a lot of good money in a short time because as the stock compresses the pressure builds up. These are best when the stock is already in a nice trend and you get a little break. Look for a trade in the direction of the existing trend, I encourage you to be quick on these. 7. Hammer Pattern The hammer is a one of the most basic strategies for a good reason! A hammer is a single-candle bullish reversal pattern that forms after a downtrend, indicating a potential bottom. Identification: A small body with a long lower shadow and little to no upper shadow. The lower shadow should be at least twice the length of the body. Pickup hammers off the ground for the best success- meaning a hammer when the stock is low (at support) is better than a hammer at resistance. Why I Like It:  The hammer is a clear and easy-to-spot pattern that can signal the end of a downtrend. It’s particularly useful for identifying potential entry points for long positions.   So there you have it, 7 chart patterns EVERY math based trader should learn. Using technical patterns AND math based options trading significantly enhances my success. These seven patterns are some of my favorites chart patterns. They are simple and easy to trade. Incorporating these patterns into your trading to make more informed decisions and improve your trading performance. at Good Kids Trading, we’re not just about making trades; we’re about making smart, informed decisions that lead to financial freedom.   Happy Trading Good Kids, Justin I understand the stock market can feel intimidating and complicated, if you want some extra support and guidance, I help people skip levels, schedule a free discovery call with me . Lets talk stocks and see if I can help you! Click on the image below and setup a time that works for you! If this was helpful and you want to show your appreciation for my time and knowledge I love coffee ! This is not trading advice, it's for your education. I'm a dude on the internet who’s been trading for 2 decades, and I use the stock market as my primary source of income. None of this is financial advice. Any trades or decisions you choose to make are at your own risk, this is purely educational!

Here at Good Kids Trading, we primarily trade options. Options come with their own risks which, when appropriately mitigated, are far outweighed by the benefits of trading them. Regardless of whether you are trading stocks, options, crypto, real estate, or literally any other asset class, you should have a full and complete understanding of the risk involved before you dive in. This article outlines the basics for how we at GKT view and manage the risks involved with options trading. Keep in mind that the beauty of options is that there are endless ways to manage a position, and there frequently isn't one "right" way to do things. Is Options Trading Risky? Now this is a LOADED question. The short answer is definitively, "Yes!" The long answer is, "Yes, but..." To begin with, we need to address the concept of risk being relative. Using an everyday example, crossing a street is generally speaking an activity that carries risk of getting hit by a car. If that street happens to be an interstate the risk of getting hit is significantly higher than you crossing the street at the end of a cul-de-sac. In the context of options, the main factors which help put the risk into a better perspective is the underlying, the strategy, and the position size. Underlying - The term "underlying" is a general term which references the stock or ETF that is being traded. Strategy - Another broad term which paints a picture for how an option or a set of options is to be used. Using a sports analogy, man coverage and zone coverage are two strategies for playing defense. Position Size - How many options contracts, and ultimately dollars, are being risked on that given trade? This is best considered by using a percentage of your portfolio's value. $1000 is 10% of a $10,000 portfolio. Relative Risk in the Underlying The reality here is that every asset class has a perceived risk. The risks that come with real estate are much different than the risks that come with cryptocurrency and the risk is nearly impossible to quantify. There is no simple measure that says real estate is worth 2 risk units and crypto is worth 5 risk units. However, most people would generally agree that real estate is less risky than cryptocurrency. The more specific you become with this analogy, the more impossible the comparison becomes. Is a class D property in some major metropolitan downtown district more or less risky than Dogecoin? The risk becomes more easily quantifiable when you compare two different assets within the same asset class. For you and me trading the stock market, there is an easy way to answer the question, "Is TSLA more risky than KO?" and it comes in the form of Beta. Beta Approximates Risk Beta measures how much the underlying moves in comparison to "the market," typically the S&P 500. If every time S&P 500 moves the underlying of interest moves twice the amount in the same direction, the beta will likely be >1. If it moves less than the S&P 500, then it will be <1. Investopedia has a phenomenal article discussing how beta is calculated if you want to go down that rabbit hole. For the purposes of this article and how we at GKT trade, knowing the beta helps us approximate how much risk, relative to the S&P 500, the underlying carries. In a portfolio full of high beta underlyings, you should expect larger swings in your account compared to a portfolio of low beta underlyings. Just like most things, there is no right or wrong amount of beta to carry and there are certainly pro's and con's of having more or less beta. As you develop your style and risk tolerance, the beta will generally fall into place. Beta values for can be found readily on sites like Yahoo Finance . Risks of Different Option Strategies There are literally hundreds of text books, thousands of blogs, and millions of hours of video on YouTube discussing the nuances of the endless different strategies that can be employed with options. We at GKT keep it simple and believe in the importance of knowing the basics. Once you understand the principles of buying versus selling options and defined versus undefined risk strategies you can apply these concepts to match your individual risk tolerance. Before going any further, one thing that should never be forgotten is that if you let an option expire in the money , SOMETHING will happen to your account. Buying Options Just as when you buy food at the grocery store, you spend money and get something in exchange. You know exactly how much you spend upfront. With options it is the same thing. When you buy a put or a call, you pay money up front for them. This is commonly referred to as "paying a debit," or simply a "debit." The debit paid almost always represents the maximum amount of money that can be lost. Option buyers have an underlying belief that something will happen. For instance, XYZ is currently at $100 dollars in January and Jack sees that the $110 Call for February for a premium of $2.00. Jack ends up buying this call because he believes XYZ will be above $112 ($110 plus the $2.00 debit paid) at expiration in February. In strategies where a debit is paid, the underlying assumption is that something will happen to the underlying and that assumption must occur in order to be profitable. Selling Options Unfortunately selling options is slightly more complicated than buying options. Option sellers believe something will not happen. Using the example above, Jill thinks XYZ will not go above $110 in February. In fact, Jill sold the $110 February Call to Jack. The debit Jack paid goes directly into the pocket of Jill and is termed a "credit." In order for Jill to be profitable, XYZ would have to be less than $112 at expiration. But what if it there is an unexpected buyout on Jan 31st and the stock rallies to $200 at expiration? Well, Jill would be now down $88 per share (Current price of $200 minus sold strike of $110 minus credit received of $2.00), or $8800 per option contract since each options contract is for 100 shares of the underlying. Option sellers get paid the premium to cover the risk of the unknown. The buyer has to pay for the certainty that they can only lose as much as they paid. The premium associated with an option is directly related to the perceived risk of the stock. A stock with higher perceived risk, represented by beta, tends to have more expensive options. Undefined Risk Strategies Any option strategy that has an uncovered sold option will always have un defined risk. Selling a call or a put is the simplest undefined risk strategy. Selling just the call or put, without anything to back it up, or cover it, is referred to as being naked. If you don't own stock and sell a call, it is call a "naked call." If you own 100 shares and sell a call it becomes a "covered call." With puts, if you have enough cash to cover being assigned the shares, it is called a "cash-secured put," and if you don't it is a "naked put." If you want to be really technical, a naked put has defined risk in that a stock can only go to $0. If Jack sold a put on XYZ at the $100 strike and the next day the company files for bankruptcy and goes to $0.00, Jack can not lose any more than $100 per share. However, because XYZ can theoretically close at any price below $100, the risk cannot be specifically identified, which is why only selling a put gets lumped into the undefined risk category. Risk Defined Strategies The most simple risk defined strategy is buying or call or a put. The debit paid is the the maximum amount that can be lost. If anyone were to ask Jack how much he was risking on his XYZ trade he could with 100% certainty tell them $200 ($2.00 per share multiplied by 100 shares). Option strategies with multiple legs that result in a debit all will have defined risk. (An option leg refers to the individual calls or puts bought in more complex strategies. For instance, a strangle has 2 legs, an iron condor has 4, and credit spreads have 2.) There are also risk defined strategies that result in you receiving a credit. The most simple version of this is a credit spread. Regardless on if it is a put or a call credit spread, the basic set up is selling an option and then buying another one just a little bit further out of the money. An example could be Jill selling the $100 call and buying the $105 call when XYZ is currently at $95. This setup would result in you receiving a credit, lets say of $1.50. In this scenario Jill wants the stock to stay below $100 to receive the maximum profit. If we imagine the worst case scenario and at expiration XYZ closes at say $150, Jill would have only lost $3.50 per share instead of the $50 per share if she just sold the $100 call. In short, if a call or a put is sold, and another option is purchased slightly further out of the money, then the risk for that trade can be calculated and therefore is defined. If this concept is new to you, let me break this trade down in detail. At the beginning Jill believed that XYZ would not be above $100 on the expiration date. By selling the $100 call, Jill becomes obligated to sell shares to someone at $100 if the stock closes above $100 at expiration. Jill was uncomfortable with the undefined nature of this trade so she defines her risk by buying the $105 call. This second call she purchased is cheaper than the call she sold, resulting in a net credit. The $105 call she bought allows her to buy shares from someone else, even if the price of XYZ is lets say $200. In our fictitious trade, XYZ closed at $105.01. Because of this close, Jill was obligated to sell 100 shares at $100 and then bought 100 shares at $105. This resulted in a $5 per share loss. Recall she made $1.50 in credit at the beginning of the trade which means she only lost $3.50 per share on the trade. If she did not have the call at $105 and she bought 100 shares the second before the market closed, she would have lost $3.51 per share. The higher Jill has to buy shares to cover the naked call, the greater the losses. Position Size Affects Risk This principle is simple and straight forward. At GKT we intentionally keep position size small. The overall principle we subscribe to is that we want to keep our trades so small that even if we take max loss on a defined risk, or a large loss on an undefined risk, we won't blow out our account or even lose sleep at night. If you are checking the market every few minutes and following the pre and post market action willing the stock to move in a direction, the position size is too large. "Small," is a relative term and is directly related to account size and trading experienced. As a general guideline, risking about 1-2% of your account size per trade is a good place to start. If you are brand new with a smaller, 0.5-1% may be more appropriate. At the end of the day, your emotions will help you fine tune your position sizing. We keep our position size small in order to avoid trading emotionally. Emotional trading will cause you get get out of a trade too early, hold a trade for too long, enter a trade before you get a complete signal, or any number of other things. This is why we set up GTC orders once we enter our trades. It takes away the emotion of when we exit the trade! The nuances to this all depend on your trading style . Risk Management for the Options Trader Putting this all together, options trading is risky but the risks can be mitigated. Start by choosing an underlying that meets your risk tolerance. Then find a strategy that you know well and fully understand and only trade a small position size. Finally, repeat this process so that you have several different trades on at the same time. Taking trades on different underlyings with variations in strategies and directions creates diversity. This diversity guarantees that you will have some winners, some losers, and some trades that just need more time. The winners will hit their GTC orders and close out. Now you get the chance to manage the losers and let the other trades play out. Keeping position size small ends up being the key to this whole process. Small position sizing allows you to be systematic at managing your losers and capturing profit on your winners. Small position size allows you to take more trades which increases your chances of having winners. It helps you take a new trade after realizing a small loss. Small position size allows you to keep the machine going. At GKT we practice these concepts every day. Plus, trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

I'm sure you have heard so many people (including me) discuss how stock trading is passive income, but there really is not any income if you aren't taking some of the money out of your account. I see many traders who win use the profits to trade more frequently and/or adding bigger risk as they make money trading. This normally doesn't end well, lets discuss the GKT method! Taking some profits out of your brokerage account and spending it on tangible things or meaningful experiences is a powerful feeling. This process helps shift your mindset about trading because behind all the scrolling numbers on our brokerage screen, outside the candlesticks on the charts, and the clicking of buttons on our devices there is actual real money being exchanged. I'd like to challenge you to take some of the profits and spend it on tangible assets, or an experience that has positive impact for you and/or your family. And before we get too far into this: I know you are probably saying to yourself "But Justin, my trading account is small. I can't afford to take money out." I get it, we've all started small. I'm not suggesting you take a large sum of money out (not yet). I am suggesting that you make an actual withdrawal from your brokerage to your checking or savings and you buy something with it. Could you afford to buy a small gold coin (or any other asset)? How about taking your spouse/friend/child out for ice cream, coffee, or maybe dinner? A course or coaching session with someone you admire and who could help you learn from? When you do this tell others about it, brag a little bit. (Tell me when you do this. DM me in discord, email me justin@goodkidstrading.com ). If you aren't actually taking out a small amount of your profits and spending the money on something other than more stocks I hope you will consider it. I know this has made a meaningful impact on my life and today I'm going to share my first big vacation I paid for using swing trades: I remember very clearly when ABNB's stock IPO'd because this was the first time I took money out of my brokerage and paid for an entire vacation, I went through the process of withdrawing the cash and transferring it to my checking account, and I paid for a 1 week vacation in St Thomas in an ABNB. The two trades paid for the flights, the rental car, food and fun. I had previously paid bills using my stock trading profits, but this was my first time using profits to pay for a vacation. It was fun to say ABNB paid for my Airbnb. It was also powerful from a psychological standpoint. This week in St. Thomas started a new habit for me, as I type this I'm sitting on a Royal Caribbean Cruise that I paid for selling puts on RCL. I acknowledge these trips might not be obtainable for people just growing their accounts, but use this as motivation because you really can get here. I'm not that special, and sure this won't be an overnight success story for you, but it's totally possible and it's not that difficult with the right strategies, plan, and expectations. I am methodical and was a bit crazy about saving and investing for a while. It really is true that the more money you have the easier it is to make money. Taking money out of my brokerage account and spending it on bills is a must for a full time trader, but taking money out of the brokerage and spending it on tangible assets, meaningful experiences, leisure, or self improvement is a totally different experience and something everyone, no matter what your account size should do on a regular basis. It doesn't matter if you go and buy a $5 ice cream, $20 book on something you want to learn about, maybe you sign up for a coaching or mentorship, or you pay $49 for an upgraded seat on your flight using a trade you made on an airline stock. Taking money out of your account and spending it on tangible things trains the mind that this is real money and this can be passive income if you create a trading style and plan that you understand, practice and believe in. I'm not suggesting you take all your profits out, keep growing your account but what is all this for if you don't enjoy some of your winnings. If you're interested in joining a community of traders and learning more about these strategies, consider joining Good Kids Trading (GKT) by clicking here .

Almost everyone knows you can make money as a stock goes up, a lot of people understand you can make money as a stock goes down, but not as many people realize you can make money as a stock trades sideways in a range. There are several trade strategies that actually pay you as a stock moves sideways. These trades benefit from the passage of time and decreases in Implied Volatility (IV). All of the trades we are discussing today are referred to as directionally neutral. As always we have to consider our risk. There are two types of directionally neutral trades: Defined Risk and Undefined Risk trades. Defined Risk trades have a defined maximum loss. Since the risk is limited your normally also limit or reduce the profit as well. This is not a negative as you can still find trades with a good risk to reward. For beginners with smaller accounts a risk defined trade is a great starting point as defined risk trades use less buying power in addition to having a maximum loss if you are wrong. Undefined risk trades means you can lose an unlimited amount in theory, in reality the worst case is you lose a large amount of money; however, you also have the potential unlimited profits (in theory). More risk often carries the potential for more rewards, but be careful because one bad trade can erase the wins of 100 winning trades. If you are trading undefined risk trades you must have a plan if (when) the trade goes against you. Knowing your plan and exit options before entering the trade enables you to make educated decision that aren't fueled out of fear or emotion. Let's briefly discuss a couple defined and a couple undefined risk trade strategies you can use to make money as a stock trades sideways or within a set range. Reminder of common acronyms: In-The-Money (ITM) At-The-Money (ATM) Out-of- The-Money (OTM), DTE (days to expiration) Defined Risk Iron Condor Butterfly Undefined Risk: Strangle Straddle Risk Defined: An Iron Condor (IC) is setup as a single order in the broker, but composed of 2 vertical spreads (a call and a put spread). IC's are a great way to get exposure to a stock without taking a directional value. A short put spread is bullish, the short call spread is bearish. Both trades offset each other and it's impossible for both side of the spread to lose as the underlying can't trade in two ranges at expiration. A Butterfly is typically created using a ratio of calls or puts where you have a ratio like this: 1 - 2 - 1. The trade is referred to as a butterfly because the ratio looks like wings on the outside with the body having an extra contract. I'll discuss it in terms of calls, but you can also do this with puts, you do not mix calls and puts in this trade. 1 IITM call, 2 ATM calls, and 1 OTM call. Although these trades often have lower probabilities of profit (POP) these trades are great when there is high volatility and you expect the underlying to remain in a tight range. Undefined Risk A strangle is composed of 1 OTM call and 1 OTM put with different strike prices, but the same DTE. Although you can buy or sell strangles, selling strangles is the directionally neutral strategy. When selling a strangle you are selling a call and selling a put. Often you sell the option around the same delta (between 10-30 delta). Strangles are very similar to an Iron Condor, you just don't have the protection of the long call and put. If the stock breaks outside of the range you can incur a large loss. There is a lot of flexibility in managing these trades which is good if you understand, but it's bad if manage at the wrong time or make the wrong adjustment. The best case scenario is the stock stays between both strikes and you collect all the premium you collected. A straddle is composed of 1 ATM call and 1 ATM put so the strike price is the same and the DTE is the same. Straddles will pay more premium than a strangle, but you are also taking far more risk. The increased premium makes for a wider break evens, but short calls are a major risk if the stock has a large move to the upside. If you trade straddles there needs to be very high volatility and you need a high confidence level in your trade with very a defined exit strategy if the trade goes against you. GKT disclaimer: Although this trade is commonly discussed, I do not typically sell straddles as the increased premium is not worth the added risk for me. --- My preferred strategies for directionally neutral trades are Iron Condors and Strangles. Both of these strategies are key components to my success! There are lots fine details to consider and discuss, but today the main purpose is to bring awareness. No matter which strategy you decide to use it's important to recognize that you can make money as stocks trade sideways. There are strategies that work in every market direction. The goal of GKT is to educate and stimulate new thoughts. If you'd like to get more in depth, if you would like to continue this discussion join our discord! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Memorial Day weekend is coming up, summer is approaching! It's that time of the year where many of us take a well-deserved break to relax, rejuvenate, and re-energize. You might be planning to hit the beach, explore some hiking trails, or maybe it’s a staycation. As a trader you might find yourself worrying about your portfolio while sipping on that Pina Colada or hiking the Appalachian trail. For me trading is my full-time income. The bills don't take a vacation so I wanted to discuss how I manage my trading plans during vacations. This won’t be a surprise to the regular readers as I think every single post I’ve written mentions the Good Kids Trading (GKT) principals of trading small, trading often, and trading mechanically. The reason is this strategy works wonders, especially when you're away from the screen. Here's how I manage my portfolio while I'm out and about enjoying life. First concern for me is all about risk. You know we have defined risk and undefined risk trades. For defined risk trades, I don't set a stop based on my size. Why? I wrote an article on it here .. Defined risk has a max loss, so when I’m not actively monitoring the market it either hits my profit target that is setup GTC, or I will manage it when I return fully understanding trading small I can take a full loss on some defined risk trades. My larger concern is my undefined risk trades. And to be clear I take a lot of undefined risk trades. I used to be afraid to leave these on while I was gone, but I think experience and repetition helps with most of the fear. Here’s what I do if I have undefined risk trades (like strangles) that are fairly profitable - let's say above 30% profit when I'm aiming for 50% - I'd go ahead and take off that trade. This reduces the possibility of a sudden market swing wiping out my profits while I'm away. The only exception for me is if I have a short put that is profitable, but I still wouldn’t mind owning the company at the strike of my put I let theta decay keep working for me. To me that’s the beauty of being an options trader: we can use theta decay to our advantage. Theta decay, for those who aren't familiar, is the rate at which an option's price decreases over time. Even when we're away from our trading desk, we can still set up trades that benefit from this natural phenomenon. That's passive income at its finest… And that’s the advantage options have over day trading (just my opinion). However, I do lighten up on some trades that might require more adjustments throughout the week, like put calendars. Depending on how profitable they are already, I might close these trades before heading off for my break. You have to find a style that works for you, and although none of this is financial advice, I’m just some random guy who trades the market for a living, I encourage you to at least consider leaving some trades on while you are on vacation because the bills don’t stop just because you aren’t trading! You can still have your trades working for you, as long as you have the right risk management strategies in place. BUT at the same time the market will always be there when you get back! It’s those precious moments of relaxation and enjoyment won't. So, go ahead, take that break you've been longing for. Your portfolio will be just fine if you create some simple guidelines that you create and are comfortable following! So pack those bags, hit the road, enjoy your fiends and family, but I think you should keep trading Good Kids! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

When I first heard the term "math-based options trading", I'll admit, I was a little intimidated. Visions of complex equations, dense formulas, and the haunting memory of college calculus classes filled my head. But guess what? I discovered that my fears were unfounded, and yours probably are too. There's a sneaky myth that has been scaring away beginners for years. It's the assumption that to trade options successfully, you must be a math whiz. Today, I'm here to bust that myth wide open and hopefully ease some of the fear that might be holding you back. Here's the awesome truth: with the right broker, you don't have to be a math genius to profit from options. Tastytrade (that is our referral link) has an incredible platforms that does the heavy lifting for you (other brokers might as well, I'm just focusing on Tasty for today). They compute and display key numbers such as Probability of Profit (POP), right there on the option chain page. You don't need a PhD in mathematics, just a plan and a general sense of market direction – up, down, or sideways. And it doesn't stop at POP. The Tasty platform also calculates the delta, theta, the Probability of Touch, Probability of hitting 50%. All this number-crunching, once the domain of supercomputers, is now served to you on a silver platter, simplifying the entire trading process. Sure, as you progress, you might want to dive into the Black-Scholes model, or delve deeper into the greeks of options trading. But for us at GKT, trading is about keeping it small, keeping it consistent, and keeping it mechanical. And you don't need advanced mathematics for that. Aiming for a 50% profit on most trades doesn't require you to perform complex calculations. It's all about following the plan, managing your risk, and sticking to our core pillars. So, if you're someone who always reaches for the calculator for simple arithmetic, don’t sweat it. You’re not alone. In fact, you're in good company – I'm in the same boat and trading is my full-time job! At GKT, we embrace everyone, whether you're a math whiz, a number newbie, or somewhere in between join us on our discord ! Remember, trading isn't about how great you are at math, it's about how disciplined you are with your strategy. So, don’t let the “math” in math-based options trading intimidate you. It’s a lot simpler than you think, and we’re here to guide you through it! Stay smart, stay profitable, GKT fam!

As an experienced trader, I can attest to the fact that participating in mentorships, joining trading communities, and spending time (and money) on education has been essential to my trading success and my overall life. Today I want to discuss what I've learned from mentorships and education, including my search for the 'perfect' strategy and coach. A quick background for those who don't know me: I am a fan of mentorships. You might say I'm a mentor junkie... I love learning and networking. Mentorships, classes, and education have been incredibly valuable to me, but they have also taught me some important, tougher lessons. I am sharing these lessons with you in hopes that you can learn faster and hopefully avoid some of the pain I've experienced. I am writing this article on the day of January options expiration, which is a bittersweet day for me as I have a number of calls that are expiring worthless. I bought these calls over a year ago, at the time they were referred to as LEAPS (which are just calls with a lot of time priced in). I was following advice from a mentor, who told me to buy these calls as a stock pulls back and sell calls against my long calls (known as a "poor man's covered calls"). Not only did I buy calls, but I also pyramided into these calls, essentially doubling and tripling down. This was a strategy that had worked well in the past, and my coach had great success with it. However, if you haven't seen the market's performance in 2022, the market just kept going down. So today, these calls expired worthless. Luckily, I hedged these positions and made some money as the stocks continued to pull back. However, for several months, I've forced myself to stare at these calls as a reminder. These worthless calls and negative P/L were reminders that: Past performance is not indicative of future returns and it doesn't matter how qualified a coach is or how smart they appear, do not put anyone on a pedestal and remember that what works for one person might not work for you. It's important to understand the worst-case scenario and size risk appropriately so you can continue to trade tomorrow. Diversify your strategies as there is no holy grail strategy, nothing works all the time. There are a lot of salesmen out there, so be careful and do your own due diligence. Just because someone is pitching you a strategy, you can still find value. These worthless calls were also positive reminders. I am a better trader, and I've had so many unexpected, awesome experiences from these worthless calls: Every single mentorship I've taken has taught me something unexpected. It's very important to keep an open mind. I've learned life lessons from a stock mentor, I've learned about my life's purpose from a real estate mentor, and I've learned new trading strategies from a small business owner. Mistakes are learning opportunities as long as you use the knowledge. There is a lot to learn from bad strategies. It's even better if you can learn from others' mistakes, but sometimes the best lessons come from experiencing pain. Learning, networking, and helping others opens doors you never thought were possible. As you learn and contribute, you meet new people and find strength in community. This mentorship was the catalyst that formed Good Kids Trading. I was supposed to learn how to make money trading options, yet I ended up making a friend and business partner. Investing in your education is crucial for becoming successful in all aspects of your life. For trading it is important to gain a deeper understanding of the market, learn new skills and strategies, and be part of a community. Continual education is key to staying up-to-date with the latest developments in the market. As previously discussed mentorships normally lead to unexpected benefits. I signed up for that mentorship to improve my knowledge of options trading. I ended up losing money from the strategies taught, yet the mentorship is responsible for starting the path to creating the awesome community we have here at Good Kids Trading. If you want to learn how to trade options responsibility, mechanically, and successfully GKT is a trading community where you can network with other traders and share knowledge, which is a great way to get inspiration and motivation. Investing in yourself and expanding your knowledge on a continual basis is one of the most important things you can do as an options trader, and it can help you achieve your financial goals. Join our discord today: www.goodkidstrading.com/join

Today we're discussing the rationale behind our standard 50% profit target strategy and how it contrasts with other trading styles like day trading and swing trading. This question was brought up last week in our discord and it makes for a great discussion. If you would like to join a friendly group of likeminded traders join our discord it's free! Let's get started! Have you ever wondered why math-based options traders aim to close positions once we hit the 50% profit mark? The logic is pretty simple yet profound. When an options trade reaches 50% of its max profit, the risk/reward dynamic starts to tip, and it's not in our favor. We stand to gain less but still could lose big. This isn't the same as when we are trading shares of an underlying and we continue to to have a large amount of delta with the same risk profile like we do with shares. This risk/reward scenario is where the 50% profit target strategy comes in. When we close the trade we lock in a nice return, we say thanks and we look for another trade because we just freed up capital. This minimizes our risk while maximizing our wins - in essence, we're playing it smart. Day trading and swing trading typically aim for a profit target of at least 1.2 or 2.4 times the risked capital. The reason for this is simple: we are dealing with shares of stock. The game is all about price action and technical analysis. As swing or day traders, we're trying to profit from short-term price movements and are usually less concerned with implied volatility or probabilities. As options traders we're playing a different game. A lot of the time we're not trying to exactly predict short-term price movements - we're guessing on a general direction, but we mainly are playing probabilities and managing risk. We know the market can be unpredictable so we focus on winning the long game by putting statistics and research to our advantage. So why 50%? It reduces risk: When you close your position at 50% profit, you're not just bagging half the potential profit, but you're also dramatically reducing the risk of a future price swing wiping out your gains. This is because the maximum profit that can be made from the trade is now only 50% of the original max profit, but the potential loss could still be significant. It frees up capital: Closing the trade at 50% profit allows you to free up funds that can be put to work in new, fresh trades. It's like a revolving door of opportunity - as one door closes, another opens. T his approach allows us to maintain a higher turnover of trades, which aligns with the mantra of "trade small, trade often". It aligns with our GKT motto: trade small, trade often, trade mechanically. By keeping our trades small and frequent, we can continually reap the benefits of diversification and probability. And by sticking to our mechanical trading plan, we remove the emotional aspects that can often lead to poor decision-making. Setting a 50% profit target is a key part of our options trading strategy at GKT. It's a simple yet powerful technique that allows us to manage risk, free up capital, and stay focused on our long-term trading goals. And while it's different from day trading and swing trading, remember - in the end, diversification is still important, having multiple strategies and different tools in your trading tool box is how we stay profitable! Disclaimer: As with any strategy in trading, this isn't guaranteed to always result in success and should be employed as part of a broader risk management strategy. We all have to continue to learn and adapt our strategies with the market. It's important to understand the market dynamics to optimize your own trading plan. This is our goal at GKT! Keep trading the GKT way, Good Kids and remember, the game of options trading is all about playing smart, not hard: lets keep it simple.

I traded my comfortable surroundings for the wilderness of the Appalachian Trail spending 4 days and 3 nights on the trail, and it struck me how much the trail parallels options trading. But honesty I am ALWAYS thinking about trading! Here's a fun look at some key takeaways from 4 days on the Trail: 1. Embracing the Bear (Market) Ever slept in a tent in a bear sanctuary after 30 years away from camping? Talk about fear! Trading can be a lot like this. There's always the potential for bear markets, fear and panic is how so many coaches and the media makes money,, It seems intimidating, but just like sleeping in that tent with literal signs saying beware of bears, it's all about facing your fears head on, keeping your wits about you, and staying prepared. There are ways to defend your portfolio from bears, you might even be able to make some bear money as your portfolio has a drawdown. If you make a little money going down and your portfolio has some stocks (even if it's your retirement account) you just beat most people in the market! 2. The Power of Consistency The trail taught me that consistently putting one foot in front of the other gets you where you need to be. It’s the same with trading. Consistency in following our trading strategy is so important to success, particularly if you follow the GKT motto of trading small, trading often, and trading mechanically. Don't be afraid to change your strategies according to market cycles, but follow your plan and don't take outsized risks or let fear stop you from executing! 3. Planning Ahead Mapping out the next water sources was vital to ensure I had enough to drink, but not too much weight for the steep climb up Albert Mountain. To be a successful trader, planning and risk management are key. You need to balance potential profit against possible losses we write about risk/reward often in this blog. When you are thirsty on the trail and water is miles away you regret not planning ahead. Don't regret planning ahead for your trades, know all your options no matter what the underlying does. 4. Chirping Experts and Market Noise Birds start chirping every morning before sunrise, rain or shine. It's like market noise, all that chatter and speculation is distracting. You have to tune out the noise and focus on the essential signals. As I mentioned at the start the experts understand everyone is scared, and they actually like to start 'chirping' well before daylight. As the storm rolls in they get louder, they promise you this is going to be the next apocalypse and want you to panic and need their service or product to make it through. If you educate yourself you can stop listening to all the noise and be just fine! 5. Keeping Fear Zipped Away Keeping the tent zipped taught me the importance of keeping unwanted bugs (mainly spiders) out. Same thing with emotions in trading, it's so important to shut out emotions that cloud judgment (fear and greed) and lead to poor trading decisions. Fear and greed have ruined many good traders, don't let these inside your tent, keep them out. 6. Diversification in Nature The array of bugs, trees, and flowers on the trail showed me life's diversity. Similarly, diversification in your trading also helps mitigate risks and keep your investments healthy. 7. Community Matters Hiking with friends beats hiking alone any day. In trading, being part of a community like GKT gives you a network of support, knowledge, and inspiration. Our discord is free, join here 8. Saying Yes to Risk Just saying yes to experiences leads to growth. This applies to trading as well. Embracing the risk that comes with options trading is how we learn, grow, and succeed, just make sure the risk to reward is favorable . 9. Picking Your Path And finally, just because others love hiking the entire 2200 miles of the trail doesn't mean I have to. It's the same with trading. Your trading journey is unique. Just because one strategy works for someone else, doesn't mean it's right for you choose your own path and have your own goals ! And yes it's not a top 10 list because I don't have another thing to add :) The Appalachian Trail taught me a lot about life and trading. Embrace the lessons the trail throws your way, continue to trade small, often and mechanically, and let's enjoy the hike, good kids! As I say at the end of each article Join the Good Kids Trading (GKT) community today, there is no reason to do this hike alone. We're stronger together and it's way more fun!

I'm starting a new series for the blog called Trade Review, if you have a better name for the category let me know! Today I'm talking about a Goldman Sachs buy-write that I converted into a covered strangle. This is a common income generating trade strategy I use. Below I describe the trade as well as my thought process along the way. This is not financial advice, I am not a financial advisor. I'm just some guy on the internet who has been trading the market for over a decade and want to share some of my strategies. They don't always work and I'll share the losers too in this series so you can learn from my positive and negative experiences! The Strategy in Simple Terms A buy-write is when you buy 100 shares of a stock and simultaneously sell a call option (also known as a covered call) . It's a go-to move of mine on stocks I don't mind owning for a little while and it's great in a bullish market, and right now, we're in bull city . I combine buy-writes when a company's about to go ex-dividend (that's the date when you need to own the shares to get the dividend), I use a buy-write to score a kind of 'double dividend.' The trick here is to sell the shares, aka get 'called away', in the same week as I'm not looking to make a lot of money on the shares I just want to pay some bills. It almost feels like stealing a dividend and getting a little extra, but it doesn't always happen the same week. Then there's the covered strangle . It's a buy-write with a twist: you sell a put option too. It's a nice move when you're feeling bullish and don't mind buying more shares if the price drops and the stock has a good down move so premium for the put increases. As you know on ex dividend date the stock is going to drop by the amount of the dividend, it might get bought up or it might sell off even more. If it continues to sell off I use the down move to collect even more premium. Trade Decision Breakdown So why Goldman Sachs and why now? I was bullish on GS (the market overall is bullish), there was a dividend to collect , and I had a hunch that the stock was on the rise . Of course, no one can predict the future, but part of the game is playing your hunches. You don't make any money if you don't make trades. The Trade Journey (this is all posted real time in discord) I bought 100 shares of GS at 330 a share on May 30th and I immediately sold June 2nd 330 call for 2.00 If the stock traded over 330 on Friday I would make $450 in less than a week (the sold call plus the 2.50 dividend. I'm capping my upside and just looking for a quick income trade. On ex dividend day the stock gapped down and it was a bearish day, I was underwater and this trade was losing, but again I don't mind holding Goldman Sachs as long as I need to. This is where it gets fun, I sold a put on the first bearish candle (see image above) this is now a Covered Strangle. Remember put premium is higher on down days. I sold the 320 put for 1.15. So my total premium collected was 2.00+2.50+1.15= $565 in premium for the week. If i was put these shares I would have reduced my cost basis even more, buying more shares $10 lower than the first buy. The next day (June 1st) another LARGE down day (second bearish candle above). I'm losing more than the premium I received if I sold everything right now. This is why you need to follow your plan! I decided to take advantage of 2 down days in a row and I rolled my strangle to the next week (June 9 expiration) for another 2.60 credit exact same strikes. I was looking to get called away at 330 or I'll buy another 100 shares at 320 (reducing my cost basis). This means my total premium is now $825. Luckily GS made a quick recovery and the short put I sold for 4.48 was only worth .30. I closed this on June 6th. If the stock pulled back again I could always sell another put but I cut the tail risk and locked in a little gain. On June 9th I saw the following chart pattern: two hammers compressing right after a nice bullish candle with decent volume. I believe this is why people should learn technical analysis. Compression is a good thing combined with two hammer'ish candles??? Yes please! (Could I have been wrong? Absolutely!) I liked this setup so much that even though I was in Miami on vacation I decided to roll this call for another week as I'm walking along the shore of south beach! This was literally my view as I'm rolling. I got another 2.06 in premium after this roll. I'm now up to $1,031 in premium collected (but most of this was a gain on paper the only real money I had locked in so far was that 2.50 dividend and the premium from the short put i closed). GS continued its bullish move, but it was actually moving to fast for my comfort. It was nearing previous resistance. As someone who has used technical analysis for a while I understood previous resistance would be a target for many traders. I decided to sell my shares at 338.52 and I bought my covered call back for $9.65 before it hit resistance as I believed it could pull back. I might have been wrong, but since I trade full time and need income I wanted to lock in my profits. After it was all said and done I made $871.12 on this trade in less than 2 weeks. As you can see on the chart, GS did pull back, could I have traded this better?? Sure if I knew for sure what the stock was going to do, but that's always the case. You see so many 'professionals' show you these trades after, but at GKT we keep it real and post trades in real time. Wrapping Up This was a quick example into how I use buy-writes and covered strangles to generate income and how I also combine some technical analysis to my options trading. Remember, I'm not looking for perfection, and I definitely don't win them all. The goal is to learn, adapt, and hopefully, keep that income flowing. I'm not looking to double my account with this strategy, I am looking to pay my bills! I have other strategies for growth, we can cover that another week! If you want to get more real-time updates and join the conversation, head on over to our GKT discord! As always, trade responsibly and remember this isn't official financial advice. Happy trading Good Kids!