Gamma Scalping: Surfing Volatility For Steady Profits
A great way for option traders to generate consistent income in extremely volatile markets 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 gamma scalping as a way to day trade without having to pick direction – taking away most of the risks that are normally associated with day trading.
Similar to a straddle, when using this strategy, we don’t care what the market ends up doing. We are properly set up to profit either way. Up or down, it doesn’t matter. The underlying just needs to move.
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 lock 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.
One of the most frustrating things to directional traders is when a trade actually goes in their direction, making them profit, only to immediately revers and go the other way, wiping out their gains, and perhaps even then dipping lower putting them into losses. Gamma Scalping is a strategy that can erase that frustration because it immediately locks in those realized gains while repositioning itself to once again be profitable if the underlying instrument moves either way.
Gamma Scalping eliminates this. When profits are realized – gamma scalping allows you to capture them forever. And if the underlying continues the move – or heads back to where it started from – MORE profits continue.
Gamma Trading is a great tool to have in the stock and option traders toolbox and especially in extremely volatile times this strategy can be a real asset to help generate super sized profits.
And last but not least – it’s a really fun way to trade as well.
Learn more about gamma trading. Stop by Ten Nino’s site where you can find out all about how to trade the gamma scalping strategy for consistent monthly cashflow.
Filed under: Uncategorized
