New Option Trader

Dynamic Hedging Hedge entire portfolio with one or two trades. What is hedging?  A process that protects position from adverse movements.  Making a trade that counters the direction of the primary trade.  Many positions are naturally hedged (spreads, married put, most synthetics).  Doesn’t mean position can’t lose money but limits amount that can be lost [...]

What to Scan For.. Or, How to Find Good Trading Opportunities The other night I saw a presentation for what looked like a truly amazing scanning program called Best Choice Software.  I didn’t get it because even though if it’s as good as they say (and I’d make my money back with the first trade)  [...]

Rolling Up If an option is close to expiration but the stock is in the middle of a strong uptrend, rolling up is a good way to lock in profits but stay in the trade until the trend runs it’s course. Selling your long call with a lower strike while simultaneously buying a new call [...]

Volatility “Lottery tickets are a tax for people who are bad at math…” Just saw a probability analysis on lottery tickets and will probably never buy another lottery ticket again.  Basically, it was a reminder of what the odds are.  Yes, trading is a much better way to go once you know what you’re doing [...]

Assumes I have a stock in mind and am thinking of placing a trade… Determine the overall trend of the market Is the trend of the stock the same as the overall market? Check the VIX Check greeks Technical signals: – Candle signal – Slow stochastic – Moving averages Determine support and resistance Determine best [...]

Counter Intuition for the beginning trader: When a stock is hot, people want to buy and when it falls everyone thinks it’s done and want out.  But, with a good understanding of how to read a chart, it’s actually exactly the opposite: Oversold –>    buy Overbought –>    sell Riding the momentum of a [...]

Fundamentals do not move stocks – perception of fundamentals moves stocks Dojis are powerful reversal signals.  Dojis at the top – take profits.  Dojis at the bottom – wait for bullish confirmation Bullish/Bearish engulfing signals. The bigger the candle the more compelling the signal A signal isn’t a signal if it’s not occurring in a [...]

They have wifi at the Options Intensive Workshop, so I’m blogging a quick update during the break.  I’m going to try blogging throughout the workshop with little thoughts and notes that I find interesting.. Today is the bonus day and the workshop goes through Sunday.  So far it’s really great. First presentation was Ron Ianieri [...]

Almost done reading Freakonomics. Not quite what I expected but nevertheless a great book.  I started reading one day at work after my hard drive had blown up and was being replaced.  I’m always still amazed how little can be done at work when the computer is on the fritz.  All my documents, email, IM, [...]