seeking advice on options

G

glendalepaul

As a relative newcomer, I am seeking advice from the seasoned investors on how you determine your option trading opportunities.

1. what screening criteria to you use to determine the underlying stock or index that may be a candidate for your trade?

2. what constitutes a "significant" price movement? Is it a percentage of the stock's price, a function of its standard deviation, or what?

3. what software or tools would you recommend? Any particular investment books you couldn't live without?

Thanks for your time spent replying to my post. May your trades be successful.
 
The best book to read is reminiscences of a stock operator.

Options should complement your current trading strategy. Options are used to enhance returns, offer protection, etc.
 
Quote from glendalepaul:
----determine the underlying stock or index that may be a candidate for your trade?
----"significant" price movement?
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Focus more on pending news events where you expect volatility fluctuation before and after the annoucement. :cool:
 
Quote from glendalepaul:

As a relative newcomer, I am seeking advice from the seasoned investors on how you determine your option trading opportunities.

1. what screening criteria to you use to determine the underlying stock or index that may be a candidate for your trade?

2. what constitutes a "significant" price movement? Is it a percentage of the stock's price...?

3. Any particular investment books you couldn't live without?

Thanks for your time spent replying to my post. May your trades be successful.
More...
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1]Always keep good record of option trades;
underlying stock trades....Compare 2

2] Yes

3]Yes Proverbs of Solomon;
Jack Schwagers Top Trader books, S Natenburg.........................
 
observe the market first. then think, judge, bet.

do not come here seek advice.

the best teacher is the market itself.

I am a speculator. I just occasionally need the chart, daily chart.
I do not use indicators, casually for confirmation of my observation and judgement.

I sniff around for fundemental news, such as when earning, I study earning trend. when economic indicators release, how are they currently, ... I have basic idea of those data and their trend.

I use charts to screen for possible trading candidate. then I further study fundementals, try to figure out what the market is focusing on lead to the trend or trend reversal.

finally I get the trading candidate. again, I study chart. mainly to plan how I enter and exit. caculate how much premium I should pay, strike and term, plus define my target. time my trade.



each option trade is: X+Y=Z
X is the premium you paid upfront
Y is the profit/loss
Z is the exit

since I trade OTM most time, X is my maximum loss.


to become a good option trader, you need observe the market first. study the real market. do not read books about option strategies. most books are too theoretical. you do not know delta,IV,time decay..... you do not need to know. to me, I never want to know.

why? all markets move and move in the same way.
 
Quote from trader198:

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each option trade is: X+Y=Z
X is the premium you paid upfront
Y is the profit/loss
Z is the exit

since I trade OTM most time, X is my maximum loss.

...
...

why? all markets move and move in the same way. [/B]
More...

Buying OTM options, is actually a gamble, so the outcome is uaually a loss. Instead, I would suggest spreads that also have a limited loss and also can comes up with calculated profits.
 
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