The guidance we offer and info we provide are deeply researched, objective and independent. As with so many things, investing has gotten increasingly sophisticated over the years. Another important factor that you should examine prior to entry is the daily trading range. Make sure you know everything you need to do know about investing in options by following up in our Options collection. The first and the most obvious factor I look at is the price of the stock. Kirk founded Option Alpha in early and currently serves as the Head Trader. So there you have it, my criteria for finding the best stocks for options trading in , and beyond.
Stocks for Options Trading. Some good stocks for options trading that I and my mentoring students regularly employ include: GOOG, IBM, AAPL, NFLX and PCLN, to name a few. The best stocks to use will be the higher-priced stocked, generally over $ and many times many hundreds of dollars, because those stocks generate larger option .
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Kirk founded Option Alpha in early and currently serves as the Head Trader. Kirk currently lives in Pennsylvania USA with his beautiful wife and two daughters. Just finished listening to Show Option Alpha iTunes Podcast. You have to set a goal or sell point when you buy an option and to make it worthwhile from a risk reward standpoint.
Simply stated only buy an option when you have at least a 2 to 1 reward to risk scenario. Now I will give you a real life example of an options trade I just made, where I only followed 2 of the 5 steps and it cost me dearly on my trade. The option was very cheap I paid. I thought initially it would drop because the Job Numbers that were released 2 weeks ago would be strong and therefore would cause Silver to sell off. So I learned first hand how much it can cost you by not following each and every one of the 5 rules above.
So my lesson to you is not only are these 5 Rules for Trading Options important, but even more important is that you make sure before you buy an option that you have followed each and every one of the 5 rules I stated above. Meaning do not buy an option unless it meets each and every one of the 5 rules. To make it easy for yourself print out these rules and then before you trade an option make sure that you can check off each rule before you buy the option.
What I do with this list is use this as my core universe of stocks. I no longer need to trawl through every possible stock that is available to trade. Neither do I need to check if it is worth trading.
All this has been done in advance. I have discussed how I scan for stocks in detail here — How to find the best stocks to trade today, every day on demand. My personal preference is to filter for predetermined charting set ups from my universe of what I consider the very best liquid stocks.
Grab of the best pre-filtered stocks using this scan. I help traders like you become more successful with practical mentoring and a well developed step-by-step trading methodology that you can follow around your current life commitments. Save my name, email, and website in this browser for the next time I comment. You might also like this. Click Here to Leave a Comment Below 0 comments.
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Finding the best stocks for options trading is actually very easy when you know what to look for and have a solid understanding of what your portfolio "needs" to maintain it's . How to find the best stocks for options trading in This short check list is something that I run through once or twice per year to ensure I have a liquid pool of stocks that have potential to move and do interesting things with which to draw my daily stock selections from. 1 – Liquid stock. Buying a call option 5% ITM on these stocks and then assuming a % stock gain over the next three weeks yields about a 30% return for the STZ call option, but a % loss for the W call option! The dichotomy is due to the implied volatilities of the options.