As a novice investor, I'd like to share my journey so far, documenting my experiences as a beginner in the world of trading.
Currently, my account is slightly in the red. In the early stage, I faced a floating loss of 50%, but in the latter, I managed to achieve a 30% gain. Here are some insights into my growth process:
1. Rapid Learning of Options Knowledge:
I've been diligently studying options through resources like moomoo, which provides comprehensive educational articles. These resources are invaluable for beginners and are worth bookmarking.
2. How I Choose Option Targets:
- I primarily focus on buying calls. Firstly, I look for stocks whose current price is below their intrinsic value and monitor them for potential reversals. For instance, I bought into $Alphabet-A(GOOGL.US$ around the 3.4 mark when the price was around $130. This trade later resulted in a 760% return.
- I select options on assets with high liquidity and significant trading volume to ensure there's ample interest in my positions.
- I typically opt for options with a tenure of fewer than 3 months. Extremely short-term options are too volatile for my risk tolerance, while options with longer expirations tend to be more expensive and may deviate from the underlying stock's price. Therefore, I prefer options with 1-2 months to capitalize on short-term movements.
- I generally avoid options with expiration dates too close to the present (I restrain myself). These are options expiring within 1-2 weeks. Unless the probability is extremely favorable, I steer clear. For example, I bought calls twice during Tesla's decline, but as the expiration date approached, the options essentially became worthless, resulting in 100% losses. It was a painful lesson.
- I primarily focus on buying calls. Firstly, I look for stocks whose current price is below their intrinsic value and monitor them for potential reversals. For instance, I bought into $Alphabet-A(GOOGL.US$ around the 3.4 mark when the price was around $130. This trade later resulted in a 760% return.
- I select options on assets with high liquidity and significant trading volume to ensure there's ample interest in my positions.
- I typically opt for options with a tenure of fewer than 3 months. Extremely short-term options are too volatile for my risk tolerance, while options with longer expirations tend to be more expensive and may deviate from the underlying stock's price. Therefore, I prefer options with 1-2 months to capitalize on short-term movements.
- I generally avoid options with expiration dates too close to the present (I restrain myself). These are options expiring within 1-2 weeks. Unless the probability is extremely favorable, I steer clear. For example, I bought calls twice during Tesla's decline, but as the expiration date approached, the options essentially became worthless, resulting in 100% losses. It was a painful lesson.
3. Key Takeaways:
- Aggressive Strategies: Engaging in bull/bear market spread plays, buying calls/puts on individual stocks. I focus on fundamentally sound, long-term prospects such as Microsoft, Apple, Google, etc.
- Conservative Approaches: During low volatility periods (where the market doesn't move much), I find selling puts/calls on indices suitable. With lower volatility, I can adopt a long-term bullish stance, especially on the S&P 500, which has lower volatility compared to the Nasdaq. However, this strategy is susceptible to black swan events.
- Risk Awareness: Maintaining a sense of risk is crucial. I avoid allocating excessively large positions in options, as it affects my psychological well-being. Every options trade requires a mindset prepared for the worst-case scenario. If a trade goes significantly against me, I refrain from closing it until the final week.
- Fundamental Analysis: Combining fundamental research with short-term trends improves the probability of success.
- Aggressive Strategies: Engaging in bull/bear market spread plays, buying calls/puts on individual stocks. I focus on fundamentally sound, long-term prospects such as Microsoft, Apple, Google, etc.
- Conservative Approaches: During low volatility periods (where the market doesn't move much), I find selling puts/calls on indices suitable. With lower volatility, I can adopt a long-term bullish stance, especially on the S&P 500, which has lower volatility compared to the Nasdaq. However, this strategy is susceptible to black swan events.
- Risk Awareness: Maintaining a sense of risk is crucial. I avoid allocating excessively large positions in options, as it affects my psychological well-being. Every options trade requires a mindset prepared for the worst-case scenario. If a trade goes significantly against me, I refrain from closing it until the final week.
- Fundamental Analysis: Combining fundamental research with short-term trends improves the probability of success.
Feel free to leave comments!
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Dave B-71 : great advice, thank you
RW88 : I'm totally new into stock market.. I don't even understand or grasp the concept of OPTIONS.. can you provide some guide into which areas I can absorb more info?
Monay3D : Thank you for sharing. This makes me feel good about my own experiences. I’m not as confident as I would like to be to trade options. I’m still to learning. For now, investing in ETFs and holding longer is looking impressive. I have tried options but it is harder for me to grasp the concepts when working.
Daniel Jeya Raman : Good lesson! Always go for the long-term prospective and try to avoid short-term takes in the world of investing. Pullbacks are common and recoveries are common. 🫰
Kevin Lehmann : Thats common .go to other sites get trend info
71634153 : I want to close my account
104249807 : hello baby
Dorian Stephens : same here, but not 30percent
103057627 : very informative article. I just started us stocks last Sept, still learning. yes look for active trading, strong fundamentals. think options allow us to enter market at a lower cost.
104632071 RW88: you might be keen to first read a book, understanding options, author is Michael Sincere
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