Making Money Understanding Options Spreads.
It is possible to lay a stock options trader to make money every day in those chaotic days of wild market fluctuations in the use of stock options and understanding of the spread option. I know because I could do the most, and every day I work in the office to do the normal day-to-day work.
On the other hand, I "open" in the stock market portfolio to continue the recent sharp fall out, and most of my day-to-day transactions in my account stock options, some very nice large percentage of the profits , Respectively, and were able to soften the blow.
While my stock option trading strategy may seem naive to the professional traders my success cannot be denied. I have made an average of 40% a day on the days of the wild market swings. While this wild market continues I think this is an excellent options strategy that the average part time trader can do from his office.
This is how I have been able to make some very significant money trading in the options world. First I only trade 2 stocks in my options trading account. The reason being that since I am doing this while I doing my normal job I dont have time to really follow more stocks. As one really needs to understand the stock, almost be at one with it so you know how it will react when the market plunges or skyrockets. To understand the stock I study how it reacts to the extreme market activity with in its trading range. As an example lets say I am trading a stock A. I need to understand that when the market plunges 200 points "A" usualy goes down lets say 2% or 3 % and whne the stock market goes down 500 points it usually goes down lets say 5 to 7% and then does about the same to the countering up moves in the market. I dont really care about earnings etc but I make sure my 2 stocks are not carrying any special baggage that would influence their movement outside of the market swings ie. the bank stocks etc.
Once I understand how these 2 stocks reflect the market activity I then study their trading range.Lets say that during these will swings the stock trades between 57 and 63 roughly. I then study the corresponding options lets say 57.50 or 60's. I have really learned in the past month that the volume on these options is very small. As an example I might buy a small number of options, lets say 5, on a fortune 100 company and I am the only one trading any options for the entire day. I am very amused to see that my buy or sell price is duly noted as the high or low with a my volume of 5 options. However one must be very careful to understand the the real significance of the bid and ask spread when you are developing your options trading strategy. This spread has little or nothing to do with the last trade price as the market may well have soared or plunged way past the last activity price.
As for the choice I like my stock options, I basically use of communication options, there is a deadline for at least a week, feel more comfotable in a month. I would also like to make a call or put option is a little money. If the significance of the low-end stock tading activities can be said to be 58 years old, I usually buy the 57.50 call.
Maybe I totally inexperienced or just lucky but I am my system on the basis of the stock option or a 2 strategy.The the key if you really are playing the stock of how to react to understand to play every trading day Today, the market would find opportunites trade with the common market movement.
I summary below or above 2 stock on the market that I follow very closely drive stock prices do. When the market either up or down dramatically, I think I border stock trading and market reactions to stock his heavy steps developed by looking at the option of trade is based on the share price drive. It worked well for me but a market moves to a real-time to alert the stock market with a computer should be able to use.
On the other hand, I "open" in the stock market portfolio to continue the recent sharp fall out, and most of my day-to-day transactions in my account stock options, some very nice large percentage of the profits , Respectively, and were able to soften the blow.
While my stock option trading strategy may seem naive to the professional traders my success cannot be denied. I have made an average of 40% a day on the days of the wild market swings. While this wild market continues I think this is an excellent options strategy that the average part time trader can do from his office.
This is how I have been able to make some very significant money trading in the options world. First I only trade 2 stocks in my options trading account. The reason being that since I am doing this while I doing my normal job I dont have time to really follow more stocks. As one really needs to understand the stock, almost be at one with it so you know how it will react when the market plunges or skyrockets. To understand the stock I study how it reacts to the extreme market activity with in its trading range. As an example lets say I am trading a stock A. I need to understand that when the market plunges 200 points "A" usualy goes down lets say 2% or 3 % and whne the stock market goes down 500 points it usually goes down lets say 5 to 7% and then does about the same to the countering up moves in the market. I dont really care about earnings etc but I make sure my 2 stocks are not carrying any special baggage that would influence their movement outside of the market swings ie. the bank stocks etc.
Once I understand how these 2 stocks reflect the market activity I then study their trading range.Lets say that during these will swings the stock trades between 57 and 63 roughly. I then study the corresponding options lets say 57.50 or 60's. I have really learned in the past month that the volume on these options is very small. As an example I might buy a small number of options, lets say 5, on a fortune 100 company and I am the only one trading any options for the entire day. I am very amused to see that my buy or sell price is duly noted as the high or low with a my volume of 5 options. However one must be very careful to understand the the real significance of the bid and ask spread when you are developing your options trading strategy. This spread has little or nothing to do with the last trade price as the market may well have soared or plunged way past the last activity price.
As for the choice I like my stock options, I basically use of communication options, there is a deadline for at least a week, feel more comfotable in a month. I would also like to make a call or put option is a little money. If the significance of the low-end stock tading activities can be said to be 58 years old, I usually buy the 57.50 call.
Maybe I totally inexperienced or just lucky but I am my system on the basis of the stock option or a 2 strategy.The the key if you really are playing the stock of how to react to understand to play every trading day Today, the market would find opportunites trade with the common market movement.
I summary below or above 2 stock on the market that I follow very closely drive stock prices do. When the market either up or down dramatically, I think I border stock trading and market reactions to stock his heavy steps developed by looking at the option of trade is based on the share price drive. It worked well for me but a market moves to a real-time to alert the stock market with a computer should be able to use.
About the Author:
TheScienceOfTrading.com provides 90 free minutes of videos on option trading systems and provides a complete and detailed option trading course for beginners to experts.
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