Hi Everyone, I am new to the forums and just starting options trading. I have been paper trading on and off the past 2 years and just recently I started trading with real money. I have read a few books and took a few classes. So I understand the basics of risk management and position sizing and how options works. Over the past month I have been buying and selling PUTs because the market has been bearish. I havn't won a trade yet, I think I need to work on my exist strategy because my trades often go in my predicted direction. This morning I have been looking at automated trading programs. Can someone recommend beginner options strategies? My roommate likes to sell nakid calls or puts near the money and if it gets exercised he turns around and sells a covered call or put near the money. Thanks!
I took the master trader class at mach trader which teaches you how to do technical analysis and position sizing. I have listened to all of the market wizards. Reminiscence of a Stock Operator A few Van Tharp books. A bunch of random Audio CDs. I use the website Finviz to find all my trades and scan the market. My current method or strategy for trades is: I first look at the SPY ETF to gauge how the overall market is doing. If the market is bearish then I will look for a bearish sector and find a bearish stock in that sector to trade. I determine if a stock is bearish by the lower lows and lower highs, momentum, candle stick patterns and moving averages. When I find a stock that I think has potential I look at the news really quick for anything alarming. I buy a PUT about 2-3 months out that is near to out of the money. Then set my stop and adjust my stop if the trade goes in my direction.
Please share what criteria you use to select the following: The stock/sector you invest in...... Range of contract length... The strikes you choose... The credit you receive... Also, what is your desired annualized % return you hope to earn at the end of each year/ What is your "minimum" % return goal for year end? How much margin leverage, "if any", are you comfortable being on.... as a % of your account value? <<< This morning I have been looking at automated trading programs. >>> If you are too lazy to learn how to analyze and do the work yourself, the option world is NOT a good place to be.
i dont think that's a long term strategy to make money, but I did the exact same thing yesterday. It's not a loser until you get out
i'm going to give you the benefit of the doubt and hope you're joking. lenny dykstra said the same thing about his track record (this was before his unfortunate incarceration) - he would just keep doubling down to infinity and blow up himself and his subscribers.
Just because you have not closed a position doesn't mean it's not a loser. If the value of your trade has dropped, that results in a drop in your account value. If your account value has dropped, that is real. That being, your purchasing power is reduced. Just as your ability to use margin leverage is reduced. Just because those numbers still have the potential to 'fluctuate", doesn't mean those numbers are not reflective of the true value of your account. We are only as rich as our LAST trade. And only as smart as our NEXT one.
Go back to paper trading until your questions are answered, and your paper success could buy a lifetime supply of paper hookers, booze & bling.
Hi cit, I'm an experienced technical trader who made and then lost tens of thousands of dollars trading options as a newbie. I am new to the forums and just starting options trading. I have been paper trading on and off the past 2 years and just recently I started trading with real money. Did you use your paper trading experience to develop a trading plan with rules for entries, risk management and profit-taking? If not, you need to do that before trading live. Otherwise you can take the money you're risking by trading and obtain the same end result, but with more fun and excitement, at a casino. If your paper trading experience helped you develop a trading plan, then you have entry setups and triggers, risk management rules (which as a buyer of options can be either a stop loss or your position size where the "stop loss" is your full premium paid). and one or more profit target zones. Over the past month I have been buying and selling PUTs because the market has been bearish. I havn't won a trade yet, I think I need to work on my exist strategy because my trades often go in my predicted direction. If you bought Puts over the past month, how is it you've not had a winning trade? Can you share some trades (entry, target and reason for the trade/target)? Can someone recommend beginner options strategies? IMHO, there are no "beginner strategies" in trading. There are positive expectancy strategies and there are positive money management strategies and you can put together a plan based on combinations of these (for example, 90% win rate with a negative reward:risk ratio; 50% win rate with 2:1 R:R ratio; 30% win rate with a 5:1 R:R ratio). My roommate likes to sell nakid calls or puts near the money and if it gets exercised he turns around and sells a covered call or put near the money. This can work 95% of the time for a long time and wipe you out badly the one time it doesn't. When selling puts, at least some of it will be cash-secured (meaning not all of the position will be "naked") and the underlying can only drop to $0. Selling naked calls exposes you to unlimited risk. Imagine selling calls and the stock gaps up $30/share on a buyout offer the next morning. I first look at the SPY ETF to gauge how the overall market is doing. If the market is bearish then I will look for a bearish sector and find a bearish stock in that sector to trade. I determine if a stock is bearish by the lower lows and lower highs, momentum, candle stick patterns and moving averages. When I find a stock that I think has potential I look at the news really quick for anything alarming. I buy a PUT about 2-3 months out that is near to out of the money. Then set my stop and adjust my stop if the trade goes in my direction. This appears to be a reasonable positive expectancy strategy. What's missing is the specific setup and trade entry trigger. It's possible you're entering during the pullback phase in a trend instead of waiting for the pullback move to react to the expected with-trend price resistance level (in a downtrend) or price support level (in an uptrend). Since you're buying options 2-3 months out, I assume you're looking to take advantage of a significant directional price swing over a period of a month, possibly longer. Looking at a 6-month time window, the market broke into a downtrend about 3 weeks ago. Since you've only been trading live for a month, again I'm curious how you could have already closed out positions for a loss or without a profit target being reached. IMPORTANT: If price moves in your favor early in a trade, at what % favorable price move do you move your initial stop loss closer to your entry price? If price moves against you early in a trade, at what % negative price move do you tighten your initial stop loss to reduce your potential loss?
your roomate need 's a lot of acct to sell naked options,the thing to always be aware of in options is that they are full of eroding premium,so buying one ,you could be right in the direction and still lose because the premium is coming out, you would be better off as a beginner selling call spreads if bearish ,put spreads if bullish,for instance abc stock trades from 50 down to 45,your short the out of the money 55 calls @ 2.25 ,long the 60 calls @ .50, that 1.75 spread might move to .75