|
For All Your Investing Needs |
|
Welcome to the Options Section of Options Realm |
|
So you want to trade options and you don't know where to start. This is the page for you then as I am writing this from my experiences trading in the options game. I will be explaining how I trade options and what I look for when entering into certain trades. I want to first start off with what my first few options trading experiences were like. My first adventure into the wild world of options trading was through the trade simulator on Investopedia. Through the first week I had gotten very lucky and had returned over 100% on the money I was trading with. What happened next? Well, by the time the options expired I had lost all my money and was convinced that everything in the market was pure luck. I was wrong. I reevaluated my trades and I found some very interesting things. I had made the trades based of off what I thought the intrinsic value of the company was and did not even look for what would make the market agree with my price for the stock. WRONG!!!! While the buy and hold mentality works wonders with value investing the options game in completely different. I learned that the first step is finding a company that is far from its intrinsic value. But while this is enough to buy a stock it is not enough to purchase an option. When buying an option you need to do a few more steps. Step two is looking at what the company is doing in the future and see what is a potential market moving event. Now comes step three which is seeing how these events have recently been responded to by the other companies in that sector. Based off of these results you can now look for that final thing when making an options trade. The final thing is figuring out how long it is going to take the market to react to that key event that we found. Once you figure that out it is time to enter into the options contract. Using this system I have dramatically increased my results in trading options. |
