Options strategies come in many shapes and forms, but they are all intended to do one thing: make money.
Though I still trade options, I have a totally different perspective on strategy day hour for options and when to trade them. On sale here. Because of the strategy day hour for options in technology over the past 15 years, most of the trading done today is all electronic as opposed to picking up the phone and calling a broker or the pit.
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And the economy of today is now global instead of being country specific. These factors have led the trading industry to look at the markets in a broader perspective where our markets will react with what happens in Europe or Asia.
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Not only this, but the markets are becoming a 24 hour market instead of just the standard am — pm CT am — pm EST here in the U. Since the markets are based on a 24 hour basis, we now can see how the world values our markets and get a better understanding on how our markets will perform based on how the world has traded.
An Effective One Day Options Strategy
Though equity options cannot be traded until after am CT am ETI can begin to start setting up my trading strategy based on what the E-mini has done throughout the night. Knowing this, by the time the U. Once the U.
How To Trade 1 Hour Binary Option Martingale Strategy
Because of this, I like to give the market one hour before entering into an options trade. This gives the U.
Looking a Chart 1, you can see the direction of the world markets and how it affects the U. Chart 1 To trade options, I use a basic strategy. If the market is going up, I buy calls or sell puts.
If the market is going down, I sell calls or buy puts. I prefer to be a seller of options rather than a buyer; however, there are some equities that move well enough in a day that buying the option pays better than selling the option and waiting for it to deteriorate.
Apple is a good example of this. Apple is one of the stocks that track very well with the E-mini for this reason I will use it as an example in this article. Though stocks have individual news and can move more at times or lessthey will generally trend with the E-mini.
I then look at where the E-mini is trading based off of its open up or down and the overall direction of the market for the day, and see if Apple is trading in the same direction based off its open.
If so, I will buy an at-the-money, or first strike out-of-the-money, call if heading higher, or put if heading lower.
I then give the market 30 minutes to see if the direction I traded is right. If so, I place a stop at strategy day hour for options of the value I paid for the option, i.
If the market has turned and I am not getting paid, I will get out of the position and look for another opportunity later.
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If the market reverses, then I get out. If the market continues in my direction, I stay with the trade and move my stop just to the other side of the open by about 10 cents and then look to re-evaluate the trade at CT pm ET before the market closes.
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Chart 3 shows Apple and the E-mini on May 26, The closest strike would have you buying the June call on Apple. Chart 3 Chart 4 This is just one example of a stock that can be traded throughout the day.
Using the direction of the futures to get the trend shifts the odds in your favor of getting paid.
10 Traits of a Successful Options Trader
There are many stocks out there, just verify that they trend with the E-mini before using them in this manner. Happy trading! Tom Busby is founder of DTI and a pioneer in the trading industry as a world-recognized educator.
He takes a complex subject, the global markets, and puts it into an easy-to-understand language for all levels of traders and investors. He is a member of the Chicago Mercantile Exchange Group and has been a professional securities trader and broker since