Options Trading Tips
I've been a stock trader for the last ten years and I absolutely love the thrills of making a great trade. I find it quite addicting. Unfortunately, losing money on a trade can be just as disheartening, if not more.
I would advise you to study up on options as much as you can before you begin trading them. Too many people learn the hard way by losing the entire amount of their investment. Don't let that be you. Here are a few words to the wise that I hope you'll take seriously.
The first thing I'd like to talk about is the time decay factor. Options tend to deteriorate in value over time due to the fact that as you're further out from the expiration date, the likelihood of volatility is higher.
As you get closer to expiration, that time premium gradually shrinks over the weeks and month. Therefore, buying and holding is never really a wise options strategy. You should generally look to make some short term trades whenever you're buying and selling options.
Many smart traders also like to hedge their risk by doing things like straddles, or buying puts on their calls and the opposite as well.
It might end up cutting down on your profits a bit if you win, but this will really hedge you if you lose big time. I've seen way too many people lose everything they invested, simply for the fact that they failed to hedge.
Had they hedged by giving up just a few dollars, they would have kept 90% of what they lost.
By adhering to these tips, I'm sure of the fact that you'll be well ahead of the typical novice. - 23229
I would advise you to study up on options as much as you can before you begin trading them. Too many people learn the hard way by losing the entire amount of their investment. Don't let that be you. Here are a few words to the wise that I hope you'll take seriously.
The first thing I'd like to talk about is the time decay factor. Options tend to deteriorate in value over time due to the fact that as you're further out from the expiration date, the likelihood of volatility is higher.
As you get closer to expiration, that time premium gradually shrinks over the weeks and month. Therefore, buying and holding is never really a wise options strategy. You should generally look to make some short term trades whenever you're buying and selling options.
Many smart traders also like to hedge their risk by doing things like straddles, or buying puts on their calls and the opposite as well.
It might end up cutting down on your profits a bit if you win, but this will really hedge you if you lose big time. I've seen way too many people lose everything they invested, simply for the fact that they failed to hedge.
Had they hedged by giving up just a few dollars, they would have kept 90% of what they lost.
By adhering to these tips, I'm sure of the fact that you'll be well ahead of the typical novice. - 23229
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posted by X - Men @ 4:49 AM
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