You can adjust the strikes and number of contracts to suit your maximum budgeted risk. Yes, my password is: Overall, it depends on the strategy and how long I intend to hold the position that dictates which of the two derivatives I intend to use. Now that you understand a bit about how options are really priced, I will share a great swing trading options strategy with you that you can apply right away to most financial markets.
Options Swing Trading Systems
I try to be in a trade for 40 minutes max. Sure, sometimes a trade lasts a few hours, but I always close the trade at the end of the day no matter what. I like to enter my trades around 1: I enter a trade knowing whether the SPY is bullish or bearish on that day, and I never buck the trend: I make only one trade per day.
If I am trading more than that most likely I am either cocky and think I can make more money or I am trying to fix a loss trade—both are bad ideas. If the conditions are right I scale into a trade up to 4 times the dollar-cost average. I only scale down, never up—meaning I buy more as the price drops, and when I close the trade I sell everything I do not scale out.
Doing so protects me in the case of an upward spike in the market and frees me from being glued to the computer screen. I do not set stop losses. The SPY is not crazy volatile and almost always I have some money left if a trade goes against me. Plus, I never risk more than I can handle losing.
Stop losses are bad because sometimes the market really has to fall before it can pick back up. I rely on my gut to time my exit one of the reasons I have not automated this trading style. If a trade goes against me I simply wait for an uptick and use that opportunity to close the losing trade. Almost every day some buyer comes in and pushes the SPY up or down faster than normal in one big trade, but if not I sell at 3: I do not day-trade, nor do I day-trade options.
One would think SPX options would be preferred to reduce commissions costs. Also curious why trading options instead of ES futures for slippage reduction. Not my cup of tea, but choice of SPY options do not seem optimal for the trading criteria provided SPX options or ES futures seems like a better fit I am merely trying to understand, not critique!
Hundreds ways to trade if not thousands. As there is no news now that could push the Dow even higher--such as an unlikely Fed announcement that interest rates will stay low forever!
But anyone can see that the Index moves up, then sells off, then goes lower, then turns around and goes up agin. Each time the market has hit new highs recently--the SPY around it has sold off. Volume drops and prices follow, as investors believe they can buy again at lower prices. Notice the series of highs around the 20th of each month! This means that about once a month, the charts have told us to sell Calls above the market. Your risk for this DITM trade is only 0.
You can adjust the strikes and number of contracts to suit your maximum budgeted risk. If the overall market slumps, your profit will be several thousand d0llars. You will learn a simple swing trading strategy that will enable you to run circles around the novice traders that you will profit from! Read the introduction to swing trading page first to get the most out of my website! Learn the basics of trading stocks and build a solid foundation for years to come.
Learn my swing trading strategy and get started trading stocks! Learn some advanced swing trading tactics and soon you will be trading stocks like a pro! I enjoyed the newsletter. Your free trading course has been great, easy to follow and it works very well. It has turned my trading around. As I mentioned in my last email I am very much a novice trader, but the last 2 weeks I have traded as per your course and have had positive returns on 7 out of 10 trades.
I am going to incorporate your methods asap! Finding your site was like finding the Holy Grail for trading and it's free! Read the introduction page first. Start with the basics.