Swing trading ... stocks or options?

D

dozu888

Hi you swing traders out there.. what do you see as pros and cons of swing trading stocks vs. options?

I don't have much experience in swings. The way I see it.. Stocks have tighter spreads and no time errosion, however options seem to be more forgiving if there is a monster gap against you.

Advice appreciated.
 
the number one consideration when dealing with options are the greeks. You simply can not take an option at face value (oh! its a call!!) but have to peel back the valuation using current/historical volatility. This is key!

Check out:


http://www.ivolatility.com

 
One way to swing trade options that helps put things more in your favor is to sell the options rather than buy them. That way you have time erosion working in your favor. Of course, this is really only a consideration if you are trading options with near term expirations. If you are dealing with options several months or more away, then time value erosion won't be as much of a consideration. I personally have swing traded near term options by selling them. The only caveat is that your profits are limited to the premium, whereas with buying options your potential profits are unlimited.
 
You must log in or register to reply here.
Back
Top