Easy stock option trading
January 18, 2007
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John Forman - The Essentials of Trading author
Several years ago I stopped trading stocks all together. After more than a decade in the market I just stopped buying and selling shares of companies. That isn’t to say I stopped playing the stock market, though. Far from it.
No, I’m not talking about trading the indices. I was doing that too, but that’s not where I’m going with this.
You see I realized at a certain point that actually owning the stocks I was trading was a waste of resources. It was incredibly inefficient for my stock strategy, which is basically a swing trading approach (holding periods of days to weeks) or maybe a bit longer-term than that. I had too much money tied up in the market and couldn’t control my risk quite as precisely as I could have done.
I made the decision at that time to switch entirely from buying and selling stocks to trading exclusively in their options. Now I’m quite well educated on options. I know all about what they are, how they can be combined in spreads, ways they can be used to play just about any kind of market scenario you can imagine, and the methods used to price them. I’ve been around the block a few times in that regard.
I also know that most options expire worthless, implying that only option sellers (writers) make any money.
Despite that, I began employing a very simple option strategy that worked exceedingly well. I’ve stuck with it ever since and don’t see myself going back to buying and selling individual shares ever again.
What to find out what my strategy is? I’ve prepared a new Easy Stock Option Trading video to outline it. Don’t worry if you don’t know anything about options. The video includes an introduction to option trading. Check it out and tell me what you think.
[...] Options expiration Friday. I might be trading , I am not sure. I would like to see a strong trending opening before deciding if I am going to jump in. While there seems to be a strong interest in Futures trading in blogsphere, I am ,in fact, start looking at options trading. I am looking at short term options trading on stocks. Of course, my focus is still in Futures. I am trying to study some basis now. John from theessentialoftrading.com did a nice video on stock options trading. check it out. [...]
[...] Easy stock option trading ” The Essentials of Trading Knowing the high volume forex trading timeframes ” Easy stock option trading … I’ve prepared a new Easy Stock Option Trading video to outline it. … [...]
Hi John- I “discovered” your blog this past weekend – WOW. I’m trading forex on the Oanda demo platform. FUN. Can’t wait for the real thing, but learning a lot mean time. Plan to take your course shortly as well.
Meanwhile, I’m interested in your options video – which is now down (I get a 404 error) and I wonder if it’s down on purpose, or if you’ll have it up again sometime?
I am attracted to efficient systems, and options have always fascinated me.
Thanks,
Amy
Thanks for pointing that out Amy. I’ve fixed the link so you can now watch the video.