Hey traders, lets get right to it. I want to share with you an easy options trading strategy, more appropriately, an incredibly accurate trading strategy.

I’m tentatively calling it the MACD dive or the MACD rise, to highlight the exact indicator we’re using and the desired directional trade we’ll be looking for. Before getting started have a look at my technical indicators MACD page for a better understanding of this truly unique indicator. Alternatively you could look at the Investopedia.com for a solid MACD description.

In addition to the easy options trading strategy described above I’m also going to cover the most important criteria to properly managing every single options trade with ease. These rules are a well kept secret that have taken me several years to fully understand but I’m going to share them with you shortly, if you’ll just stay with me here and continue reading…

When this is over I’m pretty confident you’re going to love this strategy to place option trades. In fact, your going to wonder why I shared it for free. The short answer, because I want to… The long answer, because the so called experts are selling the same information for $1000’s, and that doesn’t work for me!

So… Let me ask the question.

Is an easy options trading strategy the key to consistently profitable trading?

It can’t be… you’re thinking… I was told trading options was too difficult for the average trader to ever really understand. I was told trading options was incredibly complicated and even more risky than stocks. Well, I’m going to disappoint you today because this strategy couldn’t be any easier. Here’s the setup;

MACD dive Setup Rule:

  • MACD crossover above the zero line moving lower.

Optional Rule:

  • RSI crossover of Overbought line

 

MACD rise Setup Rule:

  • MACD crossover below the zero line moving higher.

Optional Rule:

  • RSI crossover of Oversold line

 

Lets take a look at a few actual setups and some accompanying trades…

Easy Options Trading Strategy

Directional trading strategy with FCX

Let’s look at each trade separately. Moving left to right in the image above.

Trade #1

We had a nice MACD dive setup, with the crossover to the downside happening above the zero line and moving lower. A trader can look to exit at either the next MACD crossover, or my preferred method, wait for price to make 3 consecutive higher lows. In this example the trader would have identified an exit one candle to the right of the unmarked blue up arrow.

Here are some hypothetical trades that may have been placed;

Hypothetical MACD dive

long put
long bear put spread
short bear call spread

*Trader Tip

If trading a MACD rise look for price to make 3 consecutive lower highs to exit.

If trading a MACD dive look for price to make 3 consecutive higher lows to exit.

During this sideways price action period the long option will hemorrhage extrinsic value so be aware.

 

Trade #2

Here is the next trade to the upside, the MACD rise.

Hypothetical MACD rise

Long call
Long bull call spread
short bear put spread

And that’s all there is to it. Just look to MACD for a relevant crossovers to determine ideal directional trades. They won’t all be winners because no system is, but when in doubt the MACD rise and the MACD dive can be great tools in the traders toolkit.

Ask below if you have any questions.

Only profitable trading for us all,

Jeff “the OptionBoxer”