Options Trading and Option Trading Alerts

By admin / March 25, 2019

The stock market has a number of options with the help of which traders can trade in various scrips. The basic options here are trading and futures where the trading has intraday and delivery based trading while the futures have futures and options trading. For a common trader who looks for more opportunities to earn more profit, future and options may look lucrative, but at the same time, it is important for one to know its other side as well which can ruin the profile and life if a right decision is not taken at the right time.

What is options trading?

Options trading is a financial derivative that is similar to a bond, stock or mutual fund. It gives the buyer an option to involve in buying and selling of an underlying asset at a pre-decided price on or before a certain date. Options, being versatile, give the owner the power to adjust or adapt according to requirements. However, this versatility comes with its cost.

Options being categorised as complex securities involve risk, and hence they come with disclaimers about the market risks involved. While on the other hand, ignorance in any type of investment can put you in a tight spot. It is advisable not to put your money in an investment cycle like options before properly knowing about them. From minimizing the risks of a foreign-exchange transaction or giving employing stock options, most of the MNCs today use options in one form or another.

Buyers and sellers in Option trading

People buying options are called holders, and the people involved in the selling of options are known as writers. It is generally assumed that buyers stick to long term positions while sellers are said having short term positions.

Some important distinction between buyers and sellers of options trading include:-

  1. Buyers and sellers are not obliged to buy or sell their options and hence enjoy the freedom of their own.
  2. But call writers, as well as put writers, are however obliged to buy or sell, meaning a seller is bound to make a good choice based on the promise of buying and selling.

Option trading strategies

The option trading strategies can broadly be divided into the following three categories:

  1. Volatility rush strategy –

In this strategy, the seller buys a straddle two or three weeks before earnings announcements and sells them for a premium after the results are out.

  1. Volatility crush strategy –

In this strategy, the basic trade idea is to sell options right before earnings announcements and collecting a credit when options’ premium is at the top due to elevated volatility.

  1. Ride the wave strategy –

In this strategy, the buyer buys options post earnings announcements (if the results are positive and the market reacts accordingly) and then sell them after 7 to 10 days or even before, once your target price is reached.

Professionals and Option trading alerts

The options trading has evolved very fast in recent years. Trading like stocks and other financial derivatives. With this kind of scenario, some companies have evolved that focusing solely on option trading alerts. These professionals send you alerts on the latest and happening through the mail or other sources of communication. But one should always be careful while choosing their guide.

One small mistake and you can lose thousands of dollars. Further, the services have been sub-divided into multiple time frames. Most advisory companies deal with instant or weekly alerts depending on the requirement of the user. Weekly options are more suitable for traditional and seasoned traders as they enjoy volatility similar to traditional options. In spite of this, these traders enjoy no time value in trading.

Following are the options that a professional option trading alerts firms provide:

  1. Recommended options that one should purchase.
  2. Best trade alerts for options you deal with.
  3. Option alerts with precise entry points and pivot points.
  4. Best options even before the opening bell.
  5. Steady and timely gains with real-time option alerts.

So before diving deep into the oceans of options trading make sure you get your proper options trade alerts from a professional trading firm who can guide you throughout your journey while minimizing or preventing loses at all cost.

To read more on topics like this, check out the lifestyle category.

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