My Paper on Trading
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- Date Submitted: 03/21/2011 11:51 PM
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Option Trading Notes:
On 7/13/09
* The beginning of the day, when you are wanting to trade, look at the Futures for that day. If it is positives it will give you an idea of how you will trade that day. Either a call or a put.
* Choose to trade one position per day and determine what margins you would like to make that day.
* Call side – always maintain the strategy to buy low and sale high. A $1 movement can represent a 30% to 50% gain depending on how much you buy in that position. Exp. The strike price is close to or at $420 you want to look at positions 2 or 3 spots down from that (1 in the white) The further you are from the “In the money” strike the cheaper those positions will be. You will want to look at the volume to see the likely-hood of your position being filled at the moment.
* How to read the Option Chain on the Call side:
1. In Option House select “Pro” it will show you the Bid Size (which is how many traders are buying that position at that time) It will give a good indication of what people are trying to do.
2. The Bid price on the left – Is the amount that position is selling for at the time.
3. The Ask price – Is the amount that position you can buy it for at the time. Once you buy a position anything above that purchase price is a gain. You want to at least sell (looking at the bid price) clearing your cost amount which is .20 difference.
4. The Change – It is an indicator of what the movement of that position is doing at that time. 2 or 3 is good and so it may be one you may wait to watch or buy in to make a few hundred just with a $1 upward change.
5. The “Pro” view will show you also the volume of trades each position is generating at that moment. Large volumes is a very good sign to where people are trading and if you are already at that position and people are jumping into your position you will begin to catch the wave upward
*
On 7/13/09
* The beginning of the day, when you are wanting to trade, look at the Futures for that day. If it is positives it will give you an idea of how you will trade that day. Either a call or a put.
* Choose to trade one position per day and determine what margins you would like to make that day.
* Call side – always maintain the strategy to buy low and sale high. A $1 movement can represent a 30% to 50% gain depending on how much you buy in that position. Exp. The strike price is close to or at $420 you want to look at positions 2 or 3 spots down from that (1 in the white) The further you are from the “In the money” strike the cheaper those positions will be. You will want to look at the volume to see the likely-hood of your position being filled at the moment.
* How to read the Option Chain on the Call side:
1. In Option House select “Pro” it will show you the Bid Size (which is how many traders are buying that position at that time) It will give a good indication of what people are trying to do.
2. The Bid price on the left – Is the amount that position is selling for at the time.
3. The Ask price – Is the amount that position you can buy it for at the time. Once you buy a position anything above that purchase price is a gain. You want to at least sell (looking at the bid price) clearing your cost amount which is .20 difference.
4. The Change – It is an indicator of what the movement of that position is doing at that time. 2 or 3 is good and so it may be one you may wait to watch or buy in to make a few hundred just with a $1 upward change.
5. The “Pro” view will show you also the volume of trades each position is generating at that moment. Large volumes is a very good sign to where people are trading and if you are already at that position and people are jumping into your position you will begin to catch the wave upward
*