Safe(ish) Options Price Selection
First of all, as many have noted, options is a risky game, and ultimately a zero sum game as opposed to trading stocks. The potential profits are very attractive- especially for leveraged indexes with short time limits, but unless you have a crystal ball you are likely to struggle with consistancy. I keep it safe and simple.
1. I only buy long calls that are ITM with a small bid/ask spread. obviously for companies where you identify short-immediate term strength based on fundamentals and/or catalyst there are times you can find attractive pricing if you are patient, and if you very slowly up the bid to meet the ask at the lowest price possible.
2. Mistakes include trying to play the options earnings game. It worked at first for me and then completley backfired when i realized i got lucky and even though I saw profits i still overpaid on premiums- i wouldnt play this game (just me).
3. To balance risk I may occasionally buy additional call options if the price drops (again im focused on fundamentally undervalued companies). If i didn’t have this conviction I wouldn’t buy the contracts. OPRA is a very helpful tool as well.
4. As always stay in your reahlm of knowledge… companies you understand
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