Successful practical ways to trade and profit

Discussion in 'Options' started by optionsoptions, Nov 12, 2011.

  1. hi,

    I trade options for couple years now. But I am trying to look for ways to practically trade options. Some kind of trade plan. For instance when so and so technical signals occur, enter into xyz options strategy. Practical ways to trade options.

    Is there any book that explains options trading with this approach? And any book recommendations on options trade management?
    Also I would love to hear your own approach for trade selection.

    I am looking for set of rules/strategies that works for you which i can apply in my trading. thank you very much in advance.
     
  2. bc1

    bc1

    Hi. I'm a newbie (2 mos now) directional credit spread trader with some modifications as I learn and go. I can't imagine trading for 2 years with no strategy so what are you using now?
     
  3. TROLL. You trade options for a couple of years and you are asking these questions?
     
  4. waa that's mean! :eek: he could just be buying some calls/puts over the years.

    OP, try understand the greeks first, it will give a very clear picture of your exposure no matter what type of combo you have when you net them. Once you get that, then you look into all the good stuff and pricing to find trades.
     
  5. If he posts again, I will buy you a coke.
     
  6. Hello,

    guys, I just need some guidance on what makes you successful options trader?

    i do understand greeks and traded vertical spreads, covered calls, cash secured puts etc. I made profits and losses. The main idea behind my post was i came across this forum yesterday. And i was very happy to see a group of fellow options trader.

    I am looking for guidelines that you follow all the time. for instance, if you trade vetrical spread, what technical indicators you look for entry points (moving averages crossover, momentum)? Then where do you put your spreads (the farther you put gives higher probability of success but less ROI).

    The questions I have for you are -- 1. How do you scan the market? Do you use scanners everyday looking for opportunities?
    2. what yearly target do you set for options trading? for instance i want to make 30% profit.

    If you know of successful end to end options system, please share those out.

    Again, just looking for tips and ideas from successful traders.
     
  7. My earlier reply didnt get posted, so writing again.

    I understand options theory very well. I trade many strategies like vertical spread, covered calls, cash secured naked puts and few more. But i made profits and losses.

    I posted the question to all successful options traders on this forum. I would like to know what yearly profit goals they set while options trading? How trading opportunities can be found (does it need to involve some scanners everytime?)? Does the trades have combinations of ROIs? (Vertical spreads can be set with different ROIs, the more speculative we go the higher ROI but less probability of success).

    So in nutshell, I am looking for a well defined trading system/trading log general or may be a book that talks about all these steps. Most important, i am looking for practical aspect of trading. Hope that explains my situation :)
     
  8. I do not have much experience in option trading.

    but I love the leverage, another thing is enoumous combinations to create many powerful strategies, like playing an intelligent game, full of fun.

    my simple way to profit from option is: long out of money calls or puts. of course the call/put strike needs at leat at one standard deviation movement or the probabilty of pricing hit is at 10%~30%. based on black swan theory, if a low probability thing happens, the whole thing changed , for example, the trends may be totally reversed or compltetly in chaos or no trends.

    my recent good play is in NFLX, before earning, closing at 118+, I bought lots of 100strike and 95 and 90 strikes put, all puts ended more than 10 fold gains, actually the best gain is in 90 strike put. since when it was at 118+, my 90strike put almost worth nothing, but after the earning, you know it is in deep money. from nothing to in deep money, that is not number change, that is thing's internal change.


    another inportant way to profit is: spread trading. of course, you need forsee it is a range market or trend market, where it is possible ending. the basic idea is to reduce premium risk if it is a range market. short one and buy one the same type option, so the premium is deducted or removed. recend play on Bidu is my another example. before earning, it shoot to 138+. when I look at those options, in the money calls/puts are expensive, I reasoned the resistance of Bidu is 150~160, so if I buy out of money call for example 150 call, most likely I lose, the call is at 1.8~2.8, if I buy in the money call, if I am wrong, I am losing big, I donot want that, in order to profit from this (the market already shoot 5%), I shorted 150 call and bought 140 at money call (I do not want to buy deep in moeny call, I just want to use little money to gain meaninfful money), the trade next day ended up with a small gain, not much.

    spread trading is in option experiation or events is good. but most time, it is not suitable to be employed.

    I am planning to do a spread trade on CRM this week (the earning and the experiation), and some gamble on out of money call/put. I think CRM is in nowhere between 120~150.of course if CRM is out of this range after the earning, my gamble on out of money will make me big money. so it is full of fun.

    I am learning, just a newbie. most time, I just ignore premium risk, trade options just like trade other stuff before option experiation. apply most technical setups to do trading.

    good luck with option trading
     
  9. I owe a coke.

    It depends on what you do. Options are a tool and should be used to express a view that is consistent with their characteristics. You should develop a view and then find the best way to trade that. Sometimes it will be options. Other times it will be stocks. Often there will be no way to express the view.
     
  10. IVtrader

    IVtrader

    Optionsoptions

    re:I trade options for couple years now. But I am trying to look for ways to practically trade options. Some kind of trade plan. For instance when so and so technical signals occur, enter into xyz options strategy. Practical ways to trade options.

    Is there any book that explains options trading with this approach? And any book recommendations on options trade management?
    Also I would love to hear your own approach for trade selection."

    most of the successfull and very experienced options traders will tell you that the level of IV with option premiums dictates what option strategies you use and many (but not all)will track the level of the VIX to determine this for trading the SPX and OEX. there are other volatility indexes for the RUT and NASDAQ. if you want to trade individual equities, you will need a trading platform (or software) that provides you with the IV for that security

    my guess is that you have been trading directionally(guessing whether a market is going to go up or down and capitalizing off that)although non directional trading(strategies for capitalizing on a sideways market )is a choice for you also.

    books will only take you so far and sooner or later, many options trader discover that they will have to learn to how to adjust trades as the one they've put on is on the verge of losing $$$$ and they either exit with a loss or they learn how to salvage it and turn it around.

    Option Volatility and Pricing by Shelton Natenberg and Trading Option Greeks by Dan Passarelli are 2 books that beginner traders start with but they like most books on the market don't cover adjusting trades. that will come with taking credible training.
     
    #10     Nov 13, 2011