Iron Condor

These days there can be a lot of ways to make extra money. Buying and selling real estate, getting a second job or opening up a brick and mortar business operation are among the most popular options.

But many of those traditional business options might require a heavy upfront investment or start up capital on your part, as well as paying an increasingly high interest rate on any loans.

Day trading stocks online on the other hand can offer you freedom and easy liquidation of your funds. You don’t have to tie up your initial seed capital for months or years. You can buy and sell stocks on the same day and put your potential profits back into your cash account with out making a trip to the bank and waiting in a long line.

Another good possibility of day trading is that You don’t need a lot of money to start making money, unlike the majority of conventional businesses.

But here is the first thing you MUST DO if you want to aspire success in day trading : You have to PREPARE YOUR SELF, just like you would in order to accomplish goals in other areas of your life.

Day trading is similar to any other business operation in the sense that every successful venture owes its success to the method used to conduct its business. In other words your day trading results depend in large part on your strategies and method. So never attempt to trade stocks with out using and practicing clear strategies on how to buy and sell stocks.

At the end of the day online stock trading is all about picking the best stock opportunities and following your buy and sell signals with ease and simplicity. Once you learn to master your trading decisions, you can aspire to produce consistent profitable results.

Stock Options are wonderful! This clever derivative of the equities market has to be one of the most ingenious inventions of modern times. For the trader who can learn how to win at trading options, there are many luxuries in life that can be experienced.
Success in options trading requires a consistent approach for long-term success. This statement is not meant to be some grandiose, idealistic comment made by some ‘trading theorist’. Rather, it is a statement born out of the hard knock and success experiences of the author and many other long-term, successful trader contemporaries.
A “consistent approach” to options trading can also be called a “trading system”, or an “options trading system” in this case. The term “trading system” is not necessarily confined to a series of computerized “black box” trading signals. A trading system could be something as simple as “buy an option on a stock in an uptrend that breaks the high of the previous bar after at least two days of pull back down movement that make lower lows.” A trading system is simply an organized approach that takes advantage of a repeated pattern or event that brings net profits.
Since an Option is a “Derivative” of the stock you must derive your options trading system from a stock trading system. This means your trading system must be based around actual stock price movement. That said, your trading system doesn’t need to work for all stocks it just has to work for certain types of stocks, certain volatility of stocks and certain price levels of stocks – So focus your trading system on certain stocks that have price behavior that is predictable to the net results you wish to abstract from a stock.
You can develop a trading system, a trading approach, and a trading methodology by identifying a price movement pattern (or lack of price movement pattern) or some event that occurs on some sort of regular basis. This means you can trade price behavior patterns on price charts such as: traditional chart patterns, trends, swings, pivot points, boxes – or you can trade events that motivate stock price such as earnings runs, post earnings runs, stock splits, or seasonal factors. Bottom line to make the maximum profit in options trading you want your stock to move in your favor fast and you want it to move far. Just a relatively small movement in the price of a stock can double your money in options!
There are so many different strategies and combinations that you can trade with options. You can buy calls and puts for directional trades. You can employ call spreads and put spreads to trade directional movements with a buffered risk, and profit. You can sell or purchase spreads to receive the credit of the premium decay by options expiration. You can trade straddles and strangles if you expect a big move but are not sure in which direction. You can also get into ratio back spreads, condors, and butterflies. And if you’re really feeling crazy you can sell ‘naked’ options (just better use a stop loss or you’ll end up like one of my old trading buddies who ran an account to $20 million then gave it all back selling naked options.) You can go to cboe.com for more information on options trading.
Directional options trading systems are the best. Keep it simple, buy calls for and upside trade or buy puts for a downside trade. But this means you need a directional stock trading system in order to trade directional options.
Here are a couple of different approaches for directional systems:
Develop an options trading systems that trades the swings in stock price movement. There are many good swing trading systems available today. We suggest you obtain one. Bottom line with swing trading is that you want to swing trade with the trend. Options brokers these days have advanced order technology that will allow you to enter swing trades based on the price movement of the stock so you don’t have to watch this stock all day. That huge advancement to swing trading options.
Swing trade the day bars. Most swing trading systems are based on daily bars on the stock price chart.
Swing trade the Intra Day Bars! Their other fantastic systems based on intraday charts that pin point swing trading entries.
Develop an options trading system that trades three to six month trends. This is where the big money is. Trading the large trends is where many are able to place larger sums of money to develop their net worth.
Develop an options trading system that trades pivot points. Pivot point trading is arguably the best way to trade options, because price action usually is explosive, and happens quickly in our direction when a trade works.
This is good because you can use shorter-term options and leverage yourself a little better. And it’s also nice you can make great gains in five days to four weeks on average so time decay issues become less of a worry.
There are many different directional trading methods you could use to trade options. You need to pick one, work it, and never use more than 10% options position size per trade on small accounts 1% to 5 % max position size on larger accounts. This methodical way of money management trading options is the fastest way to potentially rapid account growth, helping you avoid needless setbacks.

When it comes to option trading, the most important lesson to retain is an understanding of what’s actually being traded. The real commodity in any option trading strategy isn’t the underlying stock itself, and it has little to do directly with phrases such as implied volatility, net debit, net credit, strike price, or expiration date. Fundamentally, what’s really being traded when an option transaction is enacted are degrees of risk.

Option trading, in and of itself, is not inherently risky. Options are simply tools. Imagine a big dial labeled, Options. You turn the dial one way and your risk goes down (as do your potential rewards). You turn the dial the other way and your risk goes up (as do your rewards, either in the form of upfront cash, or in the form of potential profits). In short, you can use options (for the right price) to reduce your risk, and you can use options (if the price is right) to generate lucrative income or receive other compensation in exchange for taking on someone else’s risk.

Let’s look at some scenarios that show each side of the risk trade.

Using Options to Reduce Risk

There are various option trading strategies you can employ to reduce the risk to your stock holdings. The price you will have to pay may come in the form of an actual cash payout to purchase that protection, or it may involve exchanging some of your future potential profits in order to acquire that protection.

Here are two trades that will reduce your risk:

Using Options to be Compensated for Assuming Someone Else’s Risk

If you are willing to assume someone else’s risk you can be compensated–and sometimes quite handsomely–for your trouble. The compensation may take the form of sharing the capital gains on someone else’s stock, or it may simply take the form of a cash payment.

Here are two types of trades in which you are compensated to assume someone else’s risk:

Conclusion:

The option trade examples above are all relatively simple but they illustrate the true nature of stock options. Trafficking in options is essentially trafficking in risk. No matter how elaborate and complex an option trade becomes, the core equation of risk is still present.

Developing and maintaining an awareness of this reality of options is crucial to your own option trading success. Whether you’re looking to reduce your risk or to be compensated for assuming someone else’s, a conscious awareness of what’s really happening in any given options transaction is invaluable. Once you know what’s really at stake, you’re in a much better position to consciously look for ways to accomplish your objectives as efficiently as possible. The outsourcer of risk will seek to reduce risk as cheaply as possible, and the assumer of risk will seek the highest compensation for the risk assumed.