Many traders and investors are interested in option trading, but are scared and overwhelmed by the complexity of options trading. Many traders think of a position in stock options as a stock substitute that has a higher leverage with less capital. After all, options can be used to bet on the direction of a stock’s price, just like the stock itself. But that is not always the best strategy as options have very different characteristics than stocks, and although very closely related, there is a lot more that you need to understand about how options work before you just jump into the options market.
Options Trading 101 – Or Not
Many novice traders who are interested in trading options do the typical trade; they just buy a call or a put, usually way out-of-the-money (becuase they are cheap). Then they just sit back and wait for the option to gain value so they can sell it for a profit. Most likely, they fail and just lose the entire investment as the option expires worthless. This is NOT options trading, this is just gambling. Without understanding the underlying workings of options such as delta, theta, volatility (a primary consideration for any option strategy) and time decay, it’s best to just avoid options all together and just stick to stocks. But if you’re interested in trading in the options market, then profitmonkey.com may be the right choice if you truly want to understand how options work. So read on…
Options trading requires a good understanding of all the elements involved.
What You’ll Learn
One important difference between stocks and options is that stocks give you a small piece of ownership in the company, while options are just contracts that give you the right to buy or sell the stock at a specific price by a specific date. When you join profitmonkey.com, you will learn to understand how options work, why you would trade an option over a stock position, how to create low risk strategies and when the best time to buy or sell a specific type of options spread. This will be done through educational videos, articles and our favorite method; putting theory into practice, by placing options trades in our model portfolio. You’ll also learn critical aspects of this trading discipline using analysis and understanding when placing your own options trades. This analysis will help you use options strategies for consistent monthly income, wealth building and portfolio protection, as well as more speculative trading.
Some of the strategies that you will learn about and use include: straddles, strangles, verticals, condors, back ratio and butterflies to name a few.
How it Works
We have learned that the best way to trade options is to let time and volatility work for you. Our options strategies are not times to the second and play out over several days or all the way to expiration, and therefore, you don’t need to be glued to the markets all day long. In fact, we have found that the best trades have everything to do with patience and never panicking in our out of a trade.
- Several time a week, we will provide a new options trade idea and outline the strategy, the cost/investment and the risks. We will clearly define the trade and provide what we think is the ideal entry price. This will be done outlined through our evening video review of the trade followed up by our evening newsletter outlining the details of the trade idea.
- Our trade idea will then be live the following day and if executed, will be tracked in our model portfolio.
- Every morning after the market opens, we will send out a newsletter with trade adjustments to our current positions. You will be notified how to adjust positions, take profits when needed and cut losses when appropriate. Our options trading strategies only require minimal time (5 minutes a day) to execute and make adjustments during market hours, so it is an ideal strategy for the day trader or the active investor.
Learning to understand options and trade the strategies takes an investment of time and some dedication. As a member of profitmonkey.com, we will provide that opportunity through our educational videos and articles for each trade we outline. These videos will be produced several times per week after markets close and be best reviewed in the evening before the next trading day as all trading ideas are time sensitive.
Join our options trading service now and we will offer you a 14-day free trial to try it out. We guarantee you’ll enjoy your learning and trading experience while putting you on the road to becoming a consistently profitable options trader and investor.
