This Simple Options Strategy Has Averaged 18.6% Gains Every 16 Days

I’m not sure why, but for some reason people find it hard to understand the concept of a bull market in volatility.

I’ve been sounding off on the new bull market in volatility for months. Yet the response among readers has been, well, less than stellar.

Why is it the case? Lack of understanding? Disbelief? I’m not quite sure.

But what I can say is this . . . while I have been expounding on the new bull market in volatility, my Options Advantage service has made 30/34 winning trades. And that is due to the return of volatility.

My preference is to sell vertical call spreads, otherwise known as bear call spreads. It’s a very simple options strategy, one that is popular among professional options traders and individual investors alike. Why? Because it’s simple and effective.

You see, markets crash lower and not higher, so the strategy fits my style of trading.

The premise of the strategy is simple. If the market stays below a specific price, a price of your choosing, you profit.

It’s all about the probabilities.

For instance, with SPY currently trading for $272, you can place a trade that states this: As long as SPY closes below $278 you have the potential to make 27.4% in 36 days. That’s right, 36 days.

The best part is that you have over a 75% probability of success on the trade.

Now back to the bull market in volatility for a moment.

Volatility, as seen through the VIX, is known as the investor fear gauge. As investors become wary of the market, volatility increases. The increase in volatility leads to an increase in options prices. And this increase in options prices allows us to make larger returns OR allows us create trades with a larger margin of error. It’s a win-win situation.

As most of us already know, volatility picked up at the beginning of February and hasn’t looked back.

SOURCE: http://www.wyattresearch.com/article/market-volatility-simple-strategy-averaged-18-6-percent-gains/