Stock Options Training For Effective Trading

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Whether you are an aspiring, a beginning, or a seasoned options trader, learning about options trading is inevitable if you want to make a profitable return out of it. Although option trading can earn you large profits within a very short time and with minimal capital investment, you need to exercise a lot of caution before putting your money into it.

Perhaps you have heard stories or even experienced first hand on how easy it is to lose all your assets within a very short time.  Indeed, if not done properly, options trading can cause major losses to your assets.

Therefore, any trader who wants to grow his/her asset portfolio quickly and profitably should seriously consider stock options training. Many budding investors have ended up losing all their hard-earned money by trading options without having any prior knowledge of the trade. As everyone would agree, this is not good.

Therefore, in order to prevent such huge loses, wisdom demands that you equip yourself with the right knowledge before placing your first coin into the trade.  Though it is said experience is the best teacher, you would not want to experience this, especially if it is avoidable.

Learning how to avoid making mistakes is a great sign of maturity on every investor’s part. Moreover, it should be your desire, too. Although options trading has its risk elements, most of the risks can be circumvented by simply learning how to trade options effectively.

Learning effective stock options trading would involve learning how to monitor the market trends in order to apply the right profitable options strategies. Learning also involves being able to conduct a thorough market analysis in order to be able to pick the right stocks. Such decisions cannot be made off the top of your head without committing time to learn.

When you are considering options trading, you should first differentiate it from gambling, where you solely rely on lady luck. Options trading is far more complicated than it may appear to many. But even so, you can still trade in options and make your share of huge profits.

If you are a seasoned trader, you may now know that trading options is very profitable when properly and systematically done. Learning is the beginning of successful trading and as an investor, you would not want to compromise your success for anything else. In fact, success is the reason why any investor gets into any investment business.

In summary, learning about options trading is critical whether you are aspiring to be an options trader, you are a beginner in the trade, or you are seasoned trader. Acquiring sufficient knowledge is the only way you can make a profitable investment in options trading. As an investor in options trading, you should not gamble with your hard-earned money; you simply need to learn your trade before putting your money into it. This will enable you to avoid making common mistakes when trading.

 

 

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Implied Volatility: Earn a Living Trading Options – Video 5

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Hey tradeologists, we’re going to do our daily review today and basically it’s a very simple process.  As always, all we do is take a look at the numbers.  We manage by the numbers.  We take a look at our delta, gamma, theta, and vega.Take a quick look at profit and loss figures for the day.

Weare in pretty good shape here,I think.  We’re getting close to expiration.  We have most of our trades in the May options.  We’ve got about 11 days left on that.  What we aregoing to do is take a quicklook at our deltas.  We’re 45deltas long.  Our gamma is at  155 which is pretty normal the closer we get to expiration.  Our theta is a nice $77 at this point and our vega is at 111.30 so we’re looking pretty good here.

We are going to keep an eye on that gamma because gamma and theta go together.  Obviously what we want to do is we want to capture as much theta as possible.  Really these trades are theta positive trades.  If you want to get more information on theta-positive trades, that’s how we make our money.  We collect on average $76 every single day going forward.  We’ve got a nice profit open but we’re still early.  This is the crunch time for these trades.  Eleven days before expiration; this week our profits are just going to explode.

We’ve got $330 open on a profit figure.  We’ve got $174 just today.  If we go over to our analyze tab here, we can see that this white line is our current profit and loss position.  We’re not quite on center but you know we’re still looking pretty good here.  I think that we’ve got a little bit ofroom to move on the upside and I’ll show you the VIX in just a second.  All we do is take a look at this picture, we take a look at our monitor tab and take a look and see exactly where we are today.  All of our numbers look good.  Everything is positive and we’re starting to get into a really profitable position here.

Remember this white line here is our current profit and loss and that will continue to move up the closer we get to expiration.  We’ve only got 11 days left and this last week before weget into expiration week is going to be absolutelycritical.  We should be up around here just over the $1,000 level before Friday.

We’re going to continue to monitor this trade and hopefully we’ll get an opportunity here, if we start to get towards one ofour breakeven points, to add to ourposition.  And especially during the last week before the week of expiration, that’s a great time to put on some trades because we will just crush the theta on that.  So what we want to do is just keep an eye on this and take a look at our picture.  Our picture looks really, really good.  We’ve got plenty of upside room and plenty of downside room as we get closer to the expiration date, especially expiration week which is coming up after the end of this week.  Today is Monday, May 5.  This line is just going to start shooting right up here.  I think we’regoing to be in absolutely excellent shape.

We don’t have to do any adjustments to our positions today.  I think we’re in really good shape.  The reason that I think we’re in really good shape is because of the VIX.  Remember the volatility index really gives us kind of a hint of wherethe market is going to go.  When this goes up, remember, the market goes down and when this goes down the market goes up.  It acts as a contrary indicator and indicates fear in the market.

You can see we have these two peaks back here on January 22 and right around March 17.  We have these two huge up days on the VIX which meant huge down days in the markets.  Since then we’ve traded down.  We had a bit of a trading range in here between 22 and 25 which was very, very nice.  That was last month.  We had a great trade last month.  We did very, very nicely in there.

We’ve since broken down below the 22 level which was a prior support and was broken and is now probably  going to act as resistance at this point.  We’ve got support down here at 1,750 so we’re probably going to be trading just in this range here.

I doubt very much at this point we’re going to go below 17.  I think probably we’re going to be in this range which will be absolutely perfect for our position because if the market goes up or down we’re going to be in a pretty sweet profit territory up here.

This is our expiration line, the green line.  Eventually this white line will move up to meet this green line and that’ll be exactly what our profit is going to be for the month.  Our maximum profits can be anywhere from $1,852 toprobably around $1,100 or $1,200 for the month and remember that’sonly like one or two contracts.  Each one of these positions only has one or two contracts on so our open profit is, you know…  Take a look at our real figures.  There’s $334 on one or two contracts on each one of these positions.  If we had 10 contracts, we would be up about $3,000 right now.  So you know there’s plenty of profit potential.

This is our demonstration account.  I don’t want you to think that you have to trade in large lots here to make a lot of money.  If you’re interested in doing these types of positions, you only have to put up maybe a couple thousand dollars of margin in order to make $1,000 a month.

This happenedand this is not part ofthe daily review.  I just want to give you an idea that when the prices do move against our breakeven points, and they did this past month, that gives us an opportunity, and I really mean opportunity,to adjust our positions and add to our positions.  That’s whycapital allocation is so important.  We don’t put all our money into thesetrades at the beginning of the month.  We let them run and then take advantage of the opportunities when the prices dorun up against our breakeven point so we can add to the position.  In the beginning of the month we had maybe a thousand dollar profit potential on these positions at the beginning.  Now we’re up to almosttwo thousand dollars because we had the opportunity to adjust our positions.

When theprices move against us, they’re opportunities to add to your position and now you can see that, in fact,we’ve almost doubled our profit potential for the month.  We’ve added an additional $2,000of margin.  We start out with $1,600 in margin and we’re almost up to$2,000 in profit potential.

So that’s it for the daily review.  We’re doing very well.  The closer we get to expiration, the theta should get up to around $200 a day and that’s like with only one contract on each one of these positions.  If you were doing ten contracts, your profit would be close to maybe $1,800 a day or $2,000 a day.

So the profit potential is definitely there in this kind of business once you learn how to manage your position based on the numbers.  You have a good profit picture here.  It’s only a matter of size as far as how much money you want to make and how much risk you actually want to take.

As always, trade with confidence and have a great day.

 

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