What is Delta Vega Hedging Options Trading? #deltavega #optionstrading

► A LITTLE ABOUT ME, SJ OPTIONS AND OPTIONCOLORS
I first began trading stocks back in the early 90's, and options trading has been my passion since 2004. While trading options can be very lucrative, it can also be risky if you take the wrong approach. It was always my goal to develop an options trading method with minimal risk. Throughout my journey I found that most popular options strategies did not meet my requirements of low risk, so I set out to design my own trading approach while simultaneously developing a unique options trading platform, OptionColors, which concentrates on volatility, instant backtesting and the behavior of options.

I discovered many things about options that most traders are unaware of. Probability is not as it appears to be. Most strategies that are advertised as "high probability" are actually not because 1. they contain too much risk inside the probability zone and 2. because the probability changes each moment, so an initial probability is only valid for that initial moment.

I also found that the benefits of Theta do not outweigh its increased Gamma risk, and most options traders fail because they focus too much on Theta. The true way to profit from options is to understand their behavior.

The majority of options traders do not understand how to manage their options positions with higher order Greeks, which can be used to dynamically manage the popular Greeks such as Delta, Vega and Theta.

In short, there is a whole world of options trading that I have discovered, and I am glad to share my discoveries with you, so that you can also trade options successfully with as little risk as possible.

► A GUIDELINE FOR ALL OPTIONS TRADERS
▹. Don't follow the herds because most stock and options traders lose money each year.▹. Don't focus on Theta because increasing Theta typically increases risk even more.
▹. Don't use the popular strategies out-of-the-box because most of these methods are not profitable long-term.
▹. When modeling probability, always remove the risk from the probability zone to arrive at a more realistic probability of profit.
▹. Learn to trade volatility because it has a huge impact on the profits and losses of options.
▹. Learn to trade direction, which also greatly impacts profits and losses.
▹. Learn the basic Greeks and higher order Greeks too.
▹. Learn to construct trades with embedded safety against sudden market crashes.

► SAFETY TIPS FOR OPTION TRADERS
▹. Naked Puts can be very dangerous. Do not leverage them as they are one of the greatest causes of blown up accounts.
▹. Know that Naked Puts, The Wheel and Covered Calls all have the same risky profile.
▹. Strangles are very volatile and dangerous. Many options traders and hedge funds lose their accounts with this strategy.

► OPTIONS STRATEGIES ON MY "HIGH RISK" LIST
▹. Naked Puts.
▹. The Wheel.
▹. Covered Calls.
▹. Strangles.
▹. Straddles.
▹. Credit Spreads.
▹. Weeklies.
▹. Portfolio Margin combined with any of the above strategies.

► OPTIONS STRATEGIES ON MY "LOWER RISK" LIST BUT STILL RISKY OF COURSE
▹. Unbalanced Condors.
▹. Broken Wing Butterflies.
▹. Some forms of Ratio Spreads.
▹. Longer Term Options.

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► DISCLOSURES