Option Traders Collect Max Premium in $AMZN

There are many styles of trading that Options Traders use to make money.  Some use directional swing trading and some use some type of non directional premium collection strategies.  In our Time Bandit Option Trading Service we focus on the premium collection side of option trading and we mainly focus on using Iron Condor Option Spreads.

These types of option spreads, when put on correctly allow for the passage of time to work in your favor.  So when we say that we collected premium, we are actually talking about the extrinsic value of the options that decay over time.  This decay is part of the options model and calculated as Theta.  By putting an Iron Condor option spread on, we hope to have the stock sit within a range for a small window of time while our options decay.  Our maximum gain is the total premium collected in the spread and our total risk is the distance between the strikes less our premium collected.

One of our most recent trades was in Amazon($AMZN).

We entered the 1352.5-1525 Iron Condor.  This sold the 1352.5 put and 1525 call and bought the 1342.5 put and 1535 call.  Subscribers collected about $2.15 per option spread entered.

As you can see from the chart below, the stock stayed within our range and we were able to collect 100% of premium.