27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Because it handles payroll for about 400,000 U.S. corporations, Automatic Data Processing (NASDAQ: ADP) has troves of data on domestic employment. They release that information in the form of monthly U.S. employment growth reports. The ADP Nonfarm Employment Change release for June will be released Thursday at 8:15 a.m. ET, making for an opportunity to trade EUR/USD using Nadex spreads.
The strategy for this news event is an Iron Condor neutral, premium collection strategy. Two Nadex EUR/USD spreads are traded, with the expectation that the market will make a move and then pull back to where it started, or at least close to it. One spread could be bought below the market, with the ceiling of wherever the market is trading at the time. The other spread could be sold above the market, with the floor of wherever the market is trading at the time. The ceiling of the bought spread should meet the floor of the sold spread.
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Entry for this trade can be as early as 7:00 a.m. ET for the two-hour expiring spreads. Each spread should have a profit potential of approximately $15 or more, for a combined profit potential of at least $30. Just after the numbers are released, the market will react and make its move, and then pull back.
As time expires and the market moves back closer to where it started, the trade will begin to collect premium and show a profit. As long as the market stays between the break even points, where the market would hit approximately 30 pips up or down, and is between those points at settlement, the trade will make some profit. You can make the maximum profit when the market pulls back to right between the two spreads and remains there at settlement. For a visual of breakeven, profit and loss points, see the below image.
Stops should be set in case the market makes an unexpected move and takes off in one direction. According to the image, the 1:1 risk/reward ratio is when the market moves up or down 60 pips and stops should be placed at these points.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.