Winning With Stock Options!

by Ian Harvey

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Winning with stock options trading is not as difficult as some people would have you believe. Yes, options trading is an art in itself; but gaining knowledge, fine-tuning your money-skills and customizing your trading techniques, can lead to high rewards. Option trading is similar to stock trading; it requires right selection, timing and patience, and could also support some trades made by conservative traders and investors, particularly in the protection of a stock.

But it is wise to understand the down-side of options trading before you begin. Without applying the positive characteristics, that have already been mentioned, then the risks can be rather high and, as proven in the past, many traders lose out due to poor understanding, lack of knowledge and patience, techniques not in place, bad selections and timing, just to name a few of the pitfalls.

But, despite the volatility in the stock market, or because of it, there is an obvious rise in growth of options trading. More and more traders are including options in their investments due to the awareness that winning with stock options is a smart method to get ahead in the market.

Options trading has great advantages, and to note some of these…..

  • The opportunity to make money if a stock goes up, down and, depending on your strategy, even sideways.
  • A guaranteed limited risk when buying calls and puts.
  • A great deal of leverage while using only a fraction of the money you would normally have to put up to get into the actual stocks themselves, and
  • flexibility, which gives the options investor the opportunity to profit in virtually any market condition - even when you're unsure what the market will do.
  • Bullish options traders can make money if they believe the price of a stock will go up by buying a call option.
  • And bearish options traders can make money if they believe the price of a stock will go down by buying a put option.

Knowledge Is Important……

KNOWLEDGE IS POWER!

To be consistently winning with stock options, a sound understanding of certain factors is needed. Some factors to consider are…..

The Greeks – are values that are assigned to measure the impact that certain external factors are likely to have on the value of an option.

Implied and Historical Volatility - is the amount of fluctuation in price of an asset, and this has a huge effect on trading.

Hedging - is a strategy that can be used like insurance for your longer term investments in shares.

Synthetic Positions – are trading positions established to emulate the characteristics of another position. More specifically, they are designed to recreate the same risk and reward profile as an equivalent position.

Liquidity - it is important to select options with high liquidity, meaning that they are trading at a high volume.

Options Trading Strategies - are a vital part of success. It is said that a successful trader plans the trade then trades the plan.

Quick execution - the ability to grasp opportunities; the difference between success and failure may be determined in just a second.

A Change in the Implied Volatility Skew – which is affected by sentiment and the supply and demand relationship, provides information on whether fund managers prefer to write calls or puts. It is also known as a "vertical skew."

Supply and Demand Factors - which affect the stock market by determining prices of the individual stocks that make up the market. The major factors that affect demand for stocks are economic data, interest rates and corporate results.

In Summary…..

Having a reasonable understanding of these factors gives a stock options trader a good head-start to being able to profit successfully. A good understanding of these components goes a long way to helping meet your goal as a profitable options trader.

For those options traders that are still “dipping their toes” in the arena of options trading aiming to achieve the goal of winning with stock options; or wish to start and are unsure what to do, or to trade, but are keen to dive into this venture, there is help at-hand…..

.....Stock Options Made Easy memberships are here to help you in your endeavor to profit from stock options trading!

 WIN WITH OPTIONS TRADING!


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


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”Success is simple. Do what's right, the right way, at the right time.”


Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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