These tips are some I've learned from 3 years trading options.
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Introduction
I’d like to introduce myself, my name is Shaggad and I’m the CEO of SmartOptions® AI, an options alerts service powered by Artificial Intelligence that gets smarter over time.
I’ve been an options trader for 3 years now and I’d love to share some secrets I’ve found trading options profitably.
Here are 5 Options Trading Secrets
1. Don’t play weeklies
Playing weeklies is a sure fire way to blow up your options account.
Even if you win in the short run, in the long run you will lose due to price volatility.
Avoid these at all cost, do not let your greed take over, no matter how tempting it may be. It's just too risky.
Solution:
Play options that expire in 30 days or more. This will give you time to endure price volatility that you will face.
2. Don’t short
The market has been going up for over 200 years. It’s impossible to call the top because there is no top. Prices go up 9% year over year.
I’ve had my fair share of shorting through out the years, what I’ve learned is, do not short!
The market goes up 85% of the time and down 15% of the time, you are way better off playing the 85% uptrend only.
Playing long only is way more successful since the 200 year uptrend is on your side.
3. Add to your position only after you’re in profits already.
You don't want to go all in right away in a trade.
Adding to your position when prices go up is the best way to trade long term.
This ensures that you are buying in the right direction.
If you are already in profits, chances are you were right in the direction of the trade, and will continue to be right.
Adding to your position as prices go up gives you better chance of making a lot of money from a bigger position while also reducing your risk to the downside.
4. Buy when prices are red.
Data shows, buying call options on red days is more profitable over time than even buying on green days!
Due to emotions, when prices drop, people tend to sell.
Eventually there aren’t enough sellers anymore.
What happens when there’s no more sellers? Prices go up.
Buy when people are selling because eventually there won’t be anymore sellers.
5. Follow the big money coming into options contracts.
Data is very valuable. Information is currently the most valuable commodity.
If someone puts $10M into a call option contract expiring in 14 days, they know something!
The big players are buying up your trade data to use against you. And they’re doing so profitably.
If you had this data, you could ride the coat tails of smart money and profit with them.
And now you can!
At SmartOptions®, our A.I screens options trades in real time from all the options exchanges and alerts us to big options trades right away.
We follow the smart money in real time and profit with them!