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10739496 No.10739496 [Reply] [Original]

How do I get good at trading stock options? r/wallstreetbets are always bragging about their sick gains and I want in

>> No.10739892

Just be careful, it's hard, after Robinhood added options so many people fucked their accounts within a matter of weeks, it's harsh.

>> No.10740012

Figure out how to get inside information. The rest is easy.

>> No.10740198

I trade options and warrants almost exclusively. There are a few key things to do:

1. Watch the common share price just as closely as the derivative prices. Your goal is to determine if the value of the derivative is lagging or frontrunning the common shares. You want to be buying calls/warrants if their value is lagging the common. I'll get to puts in a sec...
2. Your risk rises the closer you get to the expiration date, so it's best to be done with your trades well before that. Usually the best money is made flipping these contracts rather than holding them to term and exercising them yourself.
3. Derivatives are often low volume and low liquidity. The way to sell (flip) them is to set three or four levels of limit sells in advance and stick to those orders. It is nearly impossible to manually hit the best sell prices on the day without a limit order already set to go the moment someone market buys or directly bids your ask.
4. Having access to level 2 data is critical for getting best buy prices on these. Often the bid/ask levels will be in a different ballpark than the last actual trade.

On puts, you're looking for a situation involving two things:
1. Common shares look like they may turn bearish soon
2. The calls and warrants are frontrunning the common shares. I know this doesn't seem like it would matter but, in my experience, it does. Sometimes investors seem to use a declining interest/declining price on calls/warrants as canary in the coalmine indicator that the common shares are about to drop.

Options trading is counter-intuitive and dangerous. Do not risk more than 10% of your portfolio on it until you're very experienced trading them. Always manage your risk.

>> No.10740205

>>10739496
it's literally gambling. Real traders use options to hedge. You can get ass fucked very hard just trading options straight, 100% luck based. The stock will go up or down, nobody knows why or when. That's all there is to it.

>> No.10740221

>>10740205

All of this is true but there are patterns in the madness... find them, exploit them. Patterns can be different for every stock.

>> No.10740250

>>10739496
The losers are probably not so keen to post their sick losses.

Most traders would be better off in all stock market index fund. Check it out, loads of research there. Very few traders (trading a position more than once a year or so) out perferm a casual ass index fund.

>> No.10740253

literally like betting on roulette
why are you even visiting LARP reddit anyway? I havent been on reddit in 5 years, dont ever give tat site a view again

>> No.10740259

>>10739496
Is there a poker subreddit? Bet their reported gainz would make ya jelly too. Yet, it’s gambling.

>> No.10740305

>>10740205
completely wrong.

you trade options to reduce risk. A good options setup can have extremely low risk

>> No.10740357

im an idiot but what i do, and ive made some decent dosh off this too, is wait for something to either be overbought or oversold and bet with the cheap options out of the money on the direction the stock should come back to. Then as soon as im green, i sell and take my modest profits.

>> No.10740376
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10740376

don’t fall for the options meme

>> No.10740379

>>10740305
>you trade options to reduce risk. A good options setup can have extremely low risk

This is the investor's approach, yes. Not the only way to play the game though. All of this stuff about gambling, feeling like options move randomly, high risk etc is true. However, it is possible to strategically do it in a way that keeps your principal mostly safe. Never, never ever ever, trust a single options play with more than 5% of your portfolio if you trade them like I do.

I don't want to give the impression that this kind of trading is a good idea for everybody or that you're missing out on something by staying away from them. You have to be a specific kind of trader with a specific mindset and a strong grasp of hedging/risk management/day trading fundamentals.

>> No.10740526

>>10740376
>blocks the dollar amount