When is it considered ready to start trading Options? Here are 5 self-assessment dimensions for those who are ready to jump in.
After the last post was made, many friends asked, so how exactly can one determine they are ready or capable of trading Options?
Come~ I will summarize in two parts:5 "trading mindsets" + 3 "practical skills"~ Let's do a self-test.
① You know that "Options are not Stocks."
Stocks are buying Assets, while Options are buying "possibilities."
Stocks can be held indefinitely, while Options depreciate daily.
✅ Self-assessment: Can you explain 'time value' and 'IV (implied volatility)'? (It can be observed more in the large cap end-of-date options.) $SPY 250514 586.00C$
② You accept that "even if the direction is correct, you may still incur losses."
Buying a Call, the symbol goes up, but you still incur a loss → because it didn't go up fast enough or the volatility decreased.
✅ Judging method: Can you give an example of a 'right call but losing money'? Below is the end-of-date options from my recent trades. $HUT 250516 16.00C$ Buying after high premium without a continuous increase makes it very difficult to make money, so this one needs to be sold quickly. What I want is a continuous increase, not oscillating upward 📈.
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③ You start "calculate first, then place an order".
Before each purchase, first calculate: What is the maximum loss? What is the profit? Where is the break-even point?
No longer buy blindly based on feelings, but rather enter the market with a plan.
✅ Method to determine: Before placing an order, do you have "Take Profit + Stop Loss + Profit and Loss Chart"?
④ You give up the fantasy of doubling overnight.”
No longer greedily buying far-out, cheap but meaningless OTM.
Aiming for a stable +20~30% is satisfactory.
✅ Method to determine: Are you now more willing to earn steadily rather than taking a gamble to double your investment?
⑤ Are you willing to start with a simulated account and practice 3-5 times before moving to live trading?
No rush, first get familiar with Buy, Sell, volatility, Greek values, and so on.
You know, simulated money can afford losses, but live trading money cannot.
✅ Determine method: Are you willing to use a simulated Account first? Have you used mooMoo's Paper Trade?
① Can read Options Chain.
Can understand strike price, buy/sell price, Volume, IV.
✅ Determination method: Do you know which is Call/Put and which is ITM/OTM?
② Can draw a simple profit and loss chart.
Can you draw the profit and loss change lines for buying Call and buying Put (actually, the built-in feature of moomoo has it, just need to understand how to use it)?
Know the maximum risk, maximum profit, and breakeven point.
✅ Determination method: Can you use a chart to show "how much it needs to rise for you to make a profit"?
③ A take profit and stop loss will be set.
Set target take profit point + withdrawal stop loss point.
Do not hesitate, do not stubbornly hold on, and plan risks in advance.
✅ Determination method: Can you say, 'Sell at what price if it rises, stop loss at what price if it falls'?
📢 If you have checked all five points above, welcome to step into the world of Options.
❌ If you cannot answer more than 2, it is recommended to observe and learn for a few more days, practice with a simulated account before live trading;
❌ If you cannot answer more than 2, it is recommended to observe and learn for a few more days, practice with a simulated account before live trading;
📍 How did you determine 'you are ready' when you first started trading Options?
📍 Or what are you most afraid of if you are currently 'considering Options'?
📍 Or what are you most afraid of if you are currently 'considering Options'?
Welcome everyone to communicate together.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Sherry111
Mentor Moo
蜗居在新加坡的日内交易者
大部分持仓睡之前会平仓，
喜欢抱着现金睡觉💤
爱市场❤️敬畏市场
纪律大于一切！🫡
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Tliet : I recently started learning about Options, and to be honest, seeing those Greek letters is a bit confusing.
However, this article explains things quite clearly, especially the part about 'Options are not Stocks,' which made me realize how far I still have to go.
Handiyanan : After a month of live trading, I've paid a lot in tuition fees
. The worst part was when the IV suddenly dropped, and even though the symbol went up, I still lost money, completely understanding what it means to 'correctly predict the direction but still lose.'
Keiith : Yesterday I also bought a doomsday call option, and it went straight to zero without moving a single day... my mindset has exploded.
102134270 : a bc l
104088143 : How to do it.
Jovi9488 : I'm a seller so I like time decay
ckyap4303 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
sunwu79 : Study and study.
小钢刀 : Where can one learn?
Sherry111 OP Keiith : The end of the world is the time value that consumes the fastest. It's best not to practice with the end times without understanding it first.
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