Should Options Traders Be Trading Out of the Money?
In options, you have the choice to trade at levels where price is now (at the money), where price remains passed the strike price, and where you think price will not move to (out of the money). Trading options at each of these three levels will produce a very different options trading strategy, with different risk and reward profiles. With so many strategies at your fingertips when you trade options, you may be wondering what is the best strategy to choose?
Creating Risk Parameters for Your Trades
My best advice about determining your risk parameters should begin with two main factors;
1. Your motivation to trade, and
2. The amount of money you are trading with.
These two factors will become the foundation of your risk parameters. The most important factor is determining the ‘why’ behind the risk you are taking in the market. The reality is that all investing involves some degree of risk and while most traders are motivated by making more money.
Why Stops Are Important For Options Traders
Stop losses are a very important topic in trading with strong opinions divided in to two general camps, traders who use stops or traders who don’t. First let me start with defining what I mean by a stop loss, I am referring to a stop loss as a physical order placed with your broker/trading platform at a specific level where you will manually exit a trade. The stop is either a level in your head where you plan to exit a trade or an actual stop order placed with your broker. Each trader will benefit from having a plan for an exit on every trade, whether the trade works for you or not.
Why You Can’t Trade Options
Options are arguably the best way to trade the market watch a video highlighting the benefits of options here ( and while there are thousands of people in our trading community at Shecantrade who agree), for those who might be new to trading options, you might be asking “how did you learn to do this?” followed by; “trading seems like such a mystery, I’m not smart enough to trade”. I can’t tell you how many times I have heard this statement over and over again! Let me tell you how to invest in options and why you need to overcome these barriers:
How to Invest in Options: What I Wish I Knew 10 Years Ago
Whether you are trying to decide what trading strategy to use, deciding whether to buy or sell options, or looking to sell call options against stocks you already own. Trading is a journey, the road to success will have many curves, turns, windfalls and bumps along the way. While it is easy to look back at trades and find better entries and exits once trades are over, this is not realistic. If I could speak to my former self 10 years ago, these are the lessons I would like to tell me.
How to Invest in Options: Selecting the Best Options Strategies to Trade
In order to be consistent, and make the best decisions about what to trade, it is important to understand when to use each of the options trading setups. By understanding how these options set ups work in reality you can effectively learn how to invest in options. Every trader looks at the market slightly differently and each has their own perspective of what will happen to the price of a specific stock. Even if these traders have a common belief in the direction of the market they may pick different options strategies to try and profit from a up, down or sideways move in a stock.
When to Trade by Selling Options vs. Trade by Buying Options
Options offer you flexibility when trading. You can either buy or sell options (or a combination of both for that matter), this allows you to have strategies for stocks that are moving up or stocks that are moving down. Options even have strategies that make money when the stock doesn’t move at all. Knowing the best strategy to use can mean the difference between a profitable trade and a losing trade.
What is a Retail Options Trader?
There are so many different ways to trade, many different markets, financial instruments with different amounts of risk and reward. Regardless of how, what, and why you trade, it is important to understand the differences and similarities between being a retail trader versus an institutional trader. The differences are very important as the approaches to the markets are different.
Why We Love Google (Trade Review)
If you read my blog post last week, Better Trade Setups While GOOGLing you will notice we talked about and reviewed GOOGL as a potential trade setup I liked. I knew based on how it was moving that I wanted to use an options strategy of selling premium in the weekly options. I wanted to sell premium in options that expired at the end of the week.
Where Do You Get Your News?
Whether you are a technical or fundamental trader, you probably still want to keep a pulse on the economic news of the day. Over the last few weeks we have seen a number of moves in the markets as it has reacted to the news of Trump’s initiatives, earnings, FOMC, and military attacks.