Day Trading Options: Are They Right for You?
As a day trader you have many investment vehicles available to you: stocks, commodities, currencies, options, futures, and more. Even within those categories there are considerations such as investing in domestic or international markets, various market segments such as tech stocks, pharmaceuticals, energy markets, and many others.
One investment strategy you may want to consider is day trading stock options. Where stock trades are immediate and fixed at the time of purchase or selling, options are your intention to buy or sell an individual asset at a specific price at a pre-determined point in time. One key attribute to this investment is its very name – option.
An option is essentially a contract that gives the holder or owner the right (but not the obligation) to purchase a specific stock at a predetermined price at a predetermined expiration date. You are not committed to execute the transaction you just have the right to do so. Owners of options can also sell the options to other parties prior to the expiration date.
If this fits in with your investment strategy and you’re willing to make the commitment to understanding the options market and its opportunity for profits, let’s talk about the basics for getting started.
Basics of Day Trading Options
Just as with any day trading activity there are some very basic elements you need to understand before making the decision that options meet your financial goals and placing that first order.
Options have expiration dates that can vary in length. Make sure you understand that date before you make a buy as it is critical to your success in creating gains. When you consider the option you’re weighing both price and timing to be able make a profit.
Education is important for options trading just as for any day trading sessions. There are many web sites, books and ebooks, seminars, webinars, and more formal courses available to gain information and input from successful options traders. Continually expand your knowledge base while at the same time gaining experience. Both will contribute to your longevity and profitability.
Manage your risk. Similar to any day trading strategy don’t lump your entire bankroll into a single buy. It is far better to make many small profits than to risk catastrophic losses from one single mistake. No trader has a 100% record of successful buys. Expect some losses but make every attempt to minimize them and control the impact. Have a plan for when you should exit a trade before losses become intolerable for your available capital.
Learn the tools that help you make options trades that fit your financial strategy. Monitoring volume of stock movement is one method options traders use to detect direction that impacts options purchases or selling. Greeks are mathematical elements commonly used in calculating the value of options. Understanding charts also adds to your ability to select options that hold potential for gains.
Day Trading Options Online
Today online trading is the most effective method of investing and certainly for day trading. Timing and immediate knowledge of market changes that may impact pricing in the short or long term are essential elements of day trading success.
SureTrader is an online broker that provides real-time information giving options traders a technical and knowledge advantage. Knowledge and fast execution of buy and sell orders leads to optimized profits. Superior service also makes day trading more enjoyable and successful for SureTrader customers.
SureTrader is committed to superior service with 24×7 access to real representatives that can answer questions and resolve any problems swiftly and efficiently. SureTrader is available on any platform and can be accessed anywhere, anytime from your desktop, laptop, and mobile devices (Android and iOS). Trade when it’s most convenient for you even after market hours.
Contact SureTrader right away to get started doing trading with the best in online brokers.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.