Daytrade Stock Options?
Does anyoone understand how to do this? Has anyone tried it? What was your profit outcome? I cuurently am holding Research in Motion (RIMM: CALL March 200 $96 and 115) My goal was to hold them long term. But because of the daily volatility, and general upward trend of this stock (option) i was thinking about daytrading the option itself. The first day i bought RIMM it went up 50%. 5 days later i earned $2400.00 on my initial outlay.
I daytrade options using a stradle strategy and it is very profitable for me. This is where you buy an out of the money call and an out of the money put and wait until you can sell both of them for more than you paid. If you pick a volatile stock with not so expensive options, then you can usually expect a tidy profit. And, since you have both the put and the call, you don’t really care which way the stock is moving. RIMM options are a little too expensive for me so I haven’t traded them.
However, if you are trying to trade only the call or the put you will need to know your stock very, very well – this is something I occasionally do when I see a very obvious trend in it. Because of the risk involved in daytrading options to one side only, I would suggest that you learn chart patterns and then practice your strategy with a virtual account until you have a significantly higher percentage of winning trades. You’ll need time to learn how to spot support and resistance points correctly.
Also, if you do get into a single side and you find that it is starting to go against you, you can always turn it into a stradle.
Wow thats risky – daytrading options. Theres an aweful lot of money to be made which is what makes it so tempting. You look at the high and low on an option and almost every day you "could have" doubled your money. What I find is the more I daytraded options, the more money I lost over time.
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I daytrade options using a stradle strategy and it is very profitable for me. This is where you buy an out of the money call and an out of the money put and wait until you can sell both of them for more than you paid. If you pick a volatile stock with not so expensive options, then you can usually expect a tidy profit. And, since you have both the put and the call, you don’t really care which way the stock is moving. RIMM options are a little too expensive for me so I haven’t traded them.
However, if you are trying to trade only the call or the put you will need to know your stock very, very well – this is something I occasionally do when I see a very obvious trend in it. Because of the risk involved in daytrading options to one side only, I would suggest that you learn chart patterns and then practice your strategy with a virtual account until you have a significantly higher percentage of winning trades. You’ll need time to learn how to spot support and resistance points correctly.
Also, if you do get into a single side and you find that it is starting to go against you, you can always turn it into a stradle.
References :
I suggest taking some of the FREE classes through http://www.bettertrades.com
Yes you can make crazy money with options. I bought EMC calls for .55 and sold them for 3.20. I dont think day trading works for options. The problem with day trading options is that there is such a large spread between the bid and ask price when you first buy an option, that you need to hold it for more than a day in order to realize a profit. Also the benefit of day trading is the ability to have large leverage, but I don’t think you can buy options on margin like you can in day trading stocks.
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Man I did really well with RIMM options till last Thursday when I didn’t take my profits in time……BIG MISTAKE. Those of you who day trade options, it be kool if you guys could give us some insights as of what stocks you guys use and why?
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