Market Overview

Jerremy Newsome Shares The Rules For His Options Strategy

Jerremy Newsome Shares The Rules For His Options Strategy

This special presentation from Jerremy Newsome is from Benzinga's first-ever virtual Benzinga Options Boot Camp that took place April 18. Click here for more coverage of this event with options trading experts giving traders of all experience levels real, dependable strategies for hitting the ground running or expanding an existing portfolio.

Jerremy Newsome is the founder and CEO of the trading education platform Real Life Trading, a community for people to learn about investing and financial freedom.

Newsome’s passion for investing began at a young age, when he turned $2,600 into $12,000 investing in Apple Inc. (NASDAQ: AAPL). Now, after years of learning and full-time trading, Newsome teaches his skills in free education courses and a live trading room.

Most of the Real Life Trading content is free, and Newsome said it's his way of giving back to the world.

“If you make money with my system, you’ll do something better for the world,” he said in an interview with Benzinga earlier this year. “You’ll tell people about my product, you’ll give more money to charity, you’ll pay off your debts, you’ll contribute to society in some kind of way.”

Newsome's Options Strategy

Over the weekend, Newsome detailed the trend-following system he uses to trade weekly expiration options on liquid securities such as Square Inc (NYSE: SQ), Tesla Inc (NASDAQ: TSLA), AAPL Inc (NASDAQ: AAPL), Roku Inc (NASDAQ: ROKU), Advanced Micro Devices Inc (NASDAQ: AMD) and Alibaba Group Holdings LTD (NYSE: BABA).

The rules of Newsome’s strategy are as follows:

  • If the security gaps above or below the prior day, you can trade the first 15 minutes.
  • If the security gaps within the prior day, you must wait 20-30 minutes before trading.
  • If the security does not gap, opening flat, you can trade after 30 minutes.
  • Always trade in the direction of the trend.

“If the stock is below the 20 and 105 exponential moving averages on a 30-minute chart, I’m only playing it bearish,” he said. “If the stock is above the 20 and 105 exponential moving averages on a 30-minute chart, I’m only playing it bullish.”

“If it's in between the moving averages, you can just wait it out.”

Newsome On Executing Strategy

The creation of a trading plan is a must in profitable trading, according to Newsome. 

“A trading plan should have some basic outline of what strategy you’re doing, why you're following it, and have some rules that constrict you.”

Newsome recommends that trading plans identify the following metrics:

  • Max risk per trade and max loss for the day.
  • Trade direction based on moving averages.
  • Trade confirmations, such as candle types.
  • A maximum number of trades to take per month.
  • A guide for staying in and not adjusting trades.
  • An exit strategy if trade targets have or haven't been hit.

Additionally, traders must hold themselves accountable for breaking rules, he said.

"You have to have some disciplinary action if you break one of your rules." 

Trading Made Easy

To learn more about this exact strategy, click here to view Newsome’s presentation at the Benzinga Options Boot Camp.

Photo by Pixabay from Pexels. 


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Posted-In: Benzinga Options Boot Camp Jerremy NewsomeEducation Options Markets General Best of Benzinga

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