Tips and tricks for option trading


There are no such things. Options are the best investment vehicles around. They allow investors to take long, short, or neutral positions. They allow you to manage risk far better than any other investment method. Use them wisely and they will treat you well. Options are best used as risk-reducing investment tools, not instruments for gambling. Read my article, why trade options? Use the options Greeks to measure risk. Do not hold any position than can — in the worst case scenario — cost more than you are willing to lose.

Be careful about the number of option contracts you trade. Do not expect miracles. Not zero, just tiny. Selling naked options is less risky than buying stock. But, like stock ownership, there is considerable downside risk. The most effective way to accomplish that is to buy one option for every option you sell. That means selling spreads, rather than naked options. Hope is not a strategy. When a position goes bad, consider tips and tricks for option trading risk.

Doing nothing and hoping for a good outcome is nothing tips and tricks for option trading than gambling. Further Reading, Options Trading: Enter your email address.