How to Trade Options: Why There Is Always An Option
Welcome to another wild and rocky start to the New Year on Wall Street. Another one. It seems that every new year starts off with moaning, speculation, despair, hope and fear from investors, both retail and otherwise.
Fortunately, this has been on of my best starts to a new year in my 10 year trading career. While the markets are down year over year at this point, my portfolio continues to grow. The ONLY thing I have changed since last year is, I have been much more active with options strategies. In order to survive long term as a trader, one must understand that the markets are a living and breathing ecosystem. In my blog about why traders fail, I discuss this concept in detail.
When we started offering swing trading alerts and education at Warrior Trading, we wanted to keep the alerts simple, accurate, easy to follow and profitable. We succeeded in creating an education course and swing trade and alert program that out performed the stock market and made our traders money. So, for this year, I set out with the goal to take what was working, make it better for a bigger audience, and offer a little bit more for everyone else out there.
Welcome to the wonderful world of options. I have been trading options for years in my own accounts, and for that of some family and friends. The problem with options is, they generally require a more sophisticated investor than we find in the retail investor market. There is more involved than just buying puts and calls when you have a directional bias. However, there has been no better time to ramp up the options trading opportunities than in these market conditions. Smart options traders understand that selling volatility is the key to consistent money.
What does selling volatility mean? Well, you can look it up for the long answer (Investopedia or CBOE). Short answer is, any pro options trader will tell you, selling premium or volatility in a market like this, is the safest bet for steady gains. The most common argument against credit strategies are from traders who say that you are intentionally capping your gains. Or that you are risking more than you are going to make.
The counter argument is always that, when trading credit strategies appropriately, your probability of success is MUCH higher than with directional debit trades. Whichever side of the fence you are on does not matter. The good news is, at Warrior Trading, we are now doing it all. I am biased to the high probability credit spreads and Iron Condor type setups in sideways markets.
However, I do realize there are opportunities in the debit spread and directional bias as well. So, if you are new to trading or new to Warrior Trading, you will see a lot of credit spreads, iron condors, debit spreads, and buy writes/covered calls IN ADDITION to our traditional breakout and breakdown strategies using stocks.
The introduction of more advanced options trading strategies at Warrior Trading gives our traders not only a wider variety of trade opportunities and more alerts for varying account sizes, but a better chance of remaining profitable, using high probability strategies in choppy market conditions.
The good news for my swing trade students is, coming this spring is a revamped swing trading and options trading course, with focus on my full arsenal of trading tools. Any new or experienced trader who is not yet profitable or wants to see and learn the markets from a professional trader’s perspective, can now have unfettered access to the tools and education required.