Everyone needs certain tools to work and get a job finished. Landscapers need mowers and rakes, carpenters need building materials, and software engineers need computers. Therefore, it only makes sense that traders need tools, too, analytical tools to be specific. Especially in today’s highly volatile markets, investors need tools that are continuously analyzing market indices, individual equities and ETFs.
Common Mistakes When Trading Options
Hi, my name is Michael McNelis and I am an Options Strategist with Key2Options. I want to share some of the common mistakes I see options traders make so that you can accelerate your learning curve and become a profitable trader.
As with most endeavors, we learn things by making mistakes. Options trading is no different. Let’s take a look at some of the most common mistakes I see in options trading and how you can avoid them.
- Not having a plan
- Buying options with too short of a duration.
- No understanding of implied volatility
- Failing to Diversify Strategies
Not having a plan - One of the Mantras at Key2Options is plan the trade and trade the plan. Prior to entering a trade, we review 10 years of historical trades to find optimal trading parameters for the strategy you have chosen. Prior to entering into a trade, we know how we will manage the trade if the market moves higher, moves lower or stays the same level. With Key2Options, we help you make rational trades not emotional trades.
Options Strategy - Key2Options Platform
Options gives you options. In traditional stock buying, most people buy and hold stocks. Some call it buy and hope. The expectation is that the market at some point will go higher and your stock price will go up. Does the market always go up? Of course not. The market can trend up, down or sideways for periods of time. Why not capitalize on major moves using options? We can use option trading for hedging positions, for capital appreciation as well as generating income.
Topics: Daily Market Summary
Commission Free Trading with Key2Options and Tradier Brokerage
Huge leaps in computing power are transforming modern finance in ways that few have ever imagined. Key2Options is an institutional grade software program designed to allow both retail and professional traders the ability to backtest trading strategies using historical stock and options data without having any knowledge of computer programming.
What type of Options Trader are you?
In options trading there are two types of traders: Directional traders and Volatility traders.
Hedging Your Portfolio
With the markets at frothy nosebleed levels, we have been asked about how to hedge your portfolio in the event of a market correction. Long term investors may have tax consequences to consider so they look to hedge their positions with options. Investors who believe there could be a correction or Black Swan event in the coming future may design a hedge with options to reduce the effect of an event.
The Fireworks are just getting started in the Stock Markets
I hope everyone had a safe and happy 4th of July!
Sell in May and go away?
There is an axiom in the market that suggest you should sell stocks in May and not get back into the market until November.
The #Russel2000index is poised to exit State 8 with the probability of 90% heading into State 7. Historically it stays in State 8 for 28 days. It has been there for 24 days presently. Look for your entry buy points and expect a 13 day bullish move for the Russell over the next 2 weeks. We should see a 4-5% move to the upside.
Topics: Daily Market Summary