Watch our video on day trading options for a living.
In this blog post we are going to talk about trading options for a living. If you're wondering can I make a living trading options...then Yes, you can trade options full time and make a comfortable living doing so. First, you need to know the proper way to trade put and call options.
If you're looking to enter the wonderful world of trading options for a living, then learning technical analysis is key. Finding your entry and exit strategies are the best way to make a living with stock options. When holding options contracts overnight, buy near the close of the day.
Buying as close to the 9 EMA (exponential moving average) gives the best momentum entry possible. You're buying at moving average support. Trading weekly options is also a popular options strategy.
Look at the daily chart when purchasing an options contract and pay close attention what the indicators are showing. If they are bullish, buy a call as you believe that stock will go up the next day. If they are bearish, buy a put as you believe the stock will go down the following day.
For example, I use the 9 EMA, 20 EMA, 50 SMA and 200 SMA on my daily charts. If I see that the price is riding above the 9 EMA and there are no moving average crossovers, then I'll consider that a bullish sign.
I also look at the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence). The RSI shows whether the stock is overbought or oversold. MACD shows the trend of the stock. Lastly I draw trend lines and find patterns as well as horizontal resistance levels.
The Ichimoku cloud is a helpful trading indicator to use with options.
You've looked over all the indicators and know which way you believe the stock will move. You must make sure you give yourself enough time on your options contract for your plan to materialize.
In the beginning, I have found myself in a sticky situation when I didn't give myself enough time on the option. All options expire. That's why selling options is a great trading strategy.
So if you choose an options contract that's only a couple days away, yes that may be cheaper, but you don't have the wiggle room if the stock decides to take longer to make its move to your profit zone.
Are you still wondering can I make a living trading options? If so, then learn options more in depth by taking our options course.
I personally love trading options for a living. You can get in on the action of high priced stocks that trade at a price level that would otherwise be outside of your budget. You may not be able to buy even one share of Amazon, but you could afford a call or put option at around $500.
Something to consider is how long you plan to hold the option for. You can day trade the stock option or hold it for a swing trade, depending on the setup. Although options are used mostly for swing trades, if you buy an option in the morning sometimes taking profit the same day is the best course of action, if resistance is encountered or a desired profit level is achieved.
Can I make a living trading options? If you're trading options for a living, taking your profits and not letting greed get a hold of you is paramount. I know from personal experience that wanting a larger profit rather than being happy with the smaller profit level can cause you to end up losing a large amount of your options contract value.
Not every options contract is going to make you $1,000. Sometimes it’s $150. Sometimes it’s $50. You never go broke taking a profit. You can always re enter that trade if you like the second setup. Keep it simple. Buy at support and sell at resistance.
We teach how to map out support and resistance on our live daily streams. Check out our trading service to learn more.
Trading options for a living can be an emotional roller coaster. Watching the price action fluctuate can wreak havoc on your emotions and cause you to panic sell or FOMO buy. I have watched a stock climbing and thought to myself that I had better get in because I am missing a big profit, only to buy at resistance and watch that stock fall back down to support.
I have also had an option contract that I applied proper technical analysis on before buying and got a good entry but news made the stock fall and I panic sold for a loss. Then I watch as it climbs back up and I could have made a profit.
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