I've been a stock trader for the last ten years and I absolutely love the thrills of making a great trade. I find it quite addicting. Unfortunately, losing money on a trade can be just as disheartening, if not more.
I'm going to share a few things I've learned along the way in an effort to help you to as much success as you can possibly find. The world of options is an extremely tempting one, but a dangerous one at that. Some traders end up losing their whole investment on one bad trade.
You may or may not be aware of the fact that options lose value over time. This is known as time decay, and it basically means that the longer it is until an options contract expires, the higher of a price it will sell at relative to nearer contracts at the same strike price.
Once the expiration date of the options contract approaches, this price gap will begin to close, as the prices of options decay. Those people who bought these contracts months before and still hold them will see their investments shrink relative to the movement of the stock. Therefore, you don't want to buy options and hold onto them for too long.
Many smart traders also like to hedge their risk by doing things like straddles, or buying puts on their calls and the opposite as well.
Try buying a few contracts in the opposite direction. That way if you lose out big time, those contracts will win big.
Had they hedged by giving up just a few dollars, they would have kept 90% of what they lost.
The last thing you want to do is lose your entire investment with options. Sometimes, unfortunately, this happens if your option never surpasses the strike price. - 23309
I'm going to share a few things I've learned along the way in an effort to help you to as much success as you can possibly find. The world of options is an extremely tempting one, but a dangerous one at that. Some traders end up losing their whole investment on one bad trade.
You may or may not be aware of the fact that options lose value over time. This is known as time decay, and it basically means that the longer it is until an options contract expires, the higher of a price it will sell at relative to nearer contracts at the same strike price.
Once the expiration date of the options contract approaches, this price gap will begin to close, as the prices of options decay. Those people who bought these contracts months before and still hold them will see their investments shrink relative to the movement of the stock. Therefore, you don't want to buy options and hold onto them for too long.
Many smart traders also like to hedge their risk by doing things like straddles, or buying puts on their calls and the opposite as well.
Try buying a few contracts in the opposite direction. That way if you lose out big time, those contracts will win big.
Had they hedged by giving up just a few dollars, they would have kept 90% of what they lost.
The last thing you want to do is lose your entire investment with options. Sometimes, unfortunately, this happens if your option never surpasses the strike price. - 23309
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