This is the first in a series of articles aimed at helping you make the transition from learning about trading options to actually trading them.

These articles deal more with finding, managing, and exiting trades and doing so in a consistently profitable manner than dealing with the nuts and bolts of options in general.

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I’m not saying if you follow the advice here or even if you follow my trades, more on that later, that you will always be profitable.

Not at all, losses are inevitable and part of the game. The trick is managing your risk so that you maintain your account integrity (read don’t blow up your account).

So, what is this business about swinging options?

One of the types of traders out there is the short-term trader, called a swing trader, that sits in between the day trader and the buy and hold trader.

The way I trade is along the lines of the swing trader, but I let an algorithm called the accelerated profit trigger (AP Trigger) determined how long I typically hold the position.

The AP Trigger concept is based on the percentage target profit achieved in what percentage of the expected days in trade.

So basically, if you make a bunch in a short time then take the money and run. It sounds more complex than it is. Here is the formula.

AP Trigger = (P / TP) / (DIT / DTE)

P – profit from closing trade in dollars

TP – profit target in dollars

DIT – days in trade

DTE – days to expiry at time of entering trade

If the AP Trigger is greater than 2 then close trade and move on.

Here is a screenshot from my trading journal to help Illustrate the example.

Example:

The trade shown in the screenshot is a put credit spread (PCS) in CRM with 8/20/21 expiration (28 DTE at execution).

Today is 7/27/21 and I entered this trade on 7/23/21, which means 5 DIT.

The target profit, based on a 50% target, is $153 and the actual profit from closing this trade at the $0.82 closing price is $55.

P = $55

TP = $153

DIT = 5

DTE = 28

Ap Trigger = ($55 / $153) / (5 / 28) = 2.01

With an AP Trigger greater than 2, I would close this trade and pocket an accelerated profit.

This really isn’t something you can backtest, rather it’s more of a conceptual approach.

The fundamental concept is that if you make a substantial profit in a very short time then if you take the money and invest it in another opportunity that, hopefully is creating more accelerated profits.

That sounds good and all, making tons on profits every couple of days!

This approach produces some very nice returns, but as you may have surmised, it helps have a steady stream of profitable trades.

This approach relies heavily on sound account risk-management rules.

I use this approach almost exclusively in my trading.

What kind of performance do I get using this approach, here’s a screenshot to help show the results?

The screenshot is from the trade history spreadsheet from a service I run, called Trading With Mike, that I started in March of this year where I allow folks to follow along in real-time with the trades I make.

It’s been running five months and has produced a 93.39% win rate with a profit of $3,972. Notice the average DIT?

I’m usually in a trade less than 10 days, swinging options!

When looking at the profit numbers, bear in mind that the results are reported as if the trade contained a single spread.