The Strategic Options day Trader: How to win Trade Plans, Master the Financial Markets and Maximize 200% Profit Daily to Become a day Trader Millionaire

By ANDREW AZIZ

The Strategic Options day Trader: How to win Trade Plans, Master the Financial Markets and Maximize 200% Profit Daily to Become a day Trader Millionaire

 

Options are financial instruments that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price and time. Options trading is one of the most versatile and flexible forms of investing, as it allows traders to profit from various market scenarios, such as bullish, bearish, neutral, or volatile.

Day trading is a style of trading that involves opening and closing positions within the same trading day, without holding any overnight risk. Day trading is appealing to many traders, as it offers the potential for fast profits, high leverage, and low capital requirements.

However, options trading and day trading are also two of the most challenging and risky forms of trading, as they require a high level of knowledge, skill, discipline, and psychology. Options trading and day trading involve complex and dynamic factors, such as price movements, time decay, volatility, liquidity, and market sentiment, that can affect the profitability and risk of each trade.

Therefore, options trading and day trading are not suitable for everyone, and they should be approached with caution and care. To succeed as an options day trader, you need to have a solid foundation of options theory and practice, a clear and consistent trading strategy, a reliable and user-friendly trading platform and tools, a strong and resilient trading psychology and discipline, and a continuous and reflective learning process.

This book is designed to help you achieve these goals and become a successful and risk-managed options day trader. In this book, you will learn:

• The basics of options and how they work
• Hoa to master the financial market
• How to master candlesticks patterns 
• How to use call and put options to speculate on price movements
• How to use spreads, straddles, and strangles to profit from volatility and direction
• How to use hedging, arbitrage, and delta-neutral strategies to reduce risk and enhance returns
• Mastering trading calculations

• How to use implied volatility and historical volatility to estimate option prices

• How to use technical analysis and indicators to identify trends and signals

• How to maximize profit on daily basis
• The benefits and challenges of day trading options

• How to choose the best broker and platform for your needs and preferences

• How to use charts, scanners, screeners, and calculators to find and analyze options

• How to use order types, execution, and risk management tools to execute and monitor trades

• The key terminologies and types of options contracts
• The most effective and popular options trading strategies for day traders
• The principles and methods of options pricing and valuation
• The tools and techniques of technical analysis and indicators
• The best options trading platforms and tools for day traders
• The importance and practice of trading psychology and discipline
• The common pitfalls and mistakes to avoid in options trading and day trading
• The real-world examples and case studies of options trading and day trading

• How to apply the concepts and strategies learned in real-world scenarios

• How to analyze and learn from successful and unsuccessful traders

By the end of this book, you will have a comprehensive and practical guide to options trading and day trading that will help you achieve your trading goals and objectives. Whether you are a beginner or an experienced trader, this book will provide you with valuable insights and tips that will enhance your trading performance and results.

• Language: English
• Publisher: Rose Gordons
• Release date: Feb 5, 2024
• ISBN: 9798224979653

Book preview

Chapter 1

What are options and how do they work?

Financial instruments known as options provide the buyer the choice—but not the obligation—to purchase or sell the underlying asset at a given price and time. As derivatives, the value of an option is contingent upon the value of another asset, such as a currency, index, stock, or commodity.

CONTRACTS INVOLVING the buyer and the seller are known as options. The seller receives the premium from the buyer in exchange for granting the option, and the buyer pays the seller a premium to obtain the option. The price of the option, known as the premium, is based on a number of variables, including the interest rate, the underlying asset's volatility, the strike price, the period before the option expires, and the current price of the underlying asset.

The fixed price at which the buyer can buy or sell the underlying asset in order to exercise the option is known as the strike price. The final day on which the option may be exercised is known as the expiration date. If the option is not exercised by the expiration date, it becomes worthless.

CALL and put options are the two primary categories of options. The buyer of a call option has the option to purchase the underlying asset at the strike price, whereas the buyer of a put option has the option to sell the underlying asset at the strike price. If the buyer exercises the option, the seller of a call option is obligated to sell the underlying asset at the striking price, and the seller of a put option is obligated to purchase the underlying asset at the strike price.

IF THE PRICE OF THE underlying asset moves in the buyer's favor, they will be able to benefit from the option. Buyers of call options, for instance, stand to gain if the underlying asset's price rises above the striking price, while buyers of put options stand to gain if the underlying asset's price drops below the strike price. If the underlying asset's price swings against the buyer or if the option expires worthless, the seller of the option may profit from the trade.

THE DIFFERENCE BETWEEN the cost of the underlying asset and the strike price, as well as the premium paid or received, determine the profit or loss on an option. The following formulas can be used to determine the profit and loss of an option:

Buyer of a call option profit or loss equals (underlying asset price - strike price) - premium.

Profit or loss for the seller of a call option is equal to premium - (strike price - underlying asset price).

Buyer of a put option's profit or loss is equal to (strike price - underlying asset price) - premium.

A put option seller's profit or loss is equal to the premium - (strike price - price of underlying asset).

The intrinsic value and time value of an option have an impact on its profit and loss as well. The difference between the strike price and the cost of the underlying asset is the intrinsic value, or the amount by which the option is in the money. The premium less the intrinsic value is the time value, or the amount by which the option is over its intrinsic value. The possibility that the option's value will rise prior to expiration is reflected in the time value, which falls as the expiration date draws near.

Options are traded on regulated exchanges like the Chicago Board Options Exchange (CBOE) in standardized contracts or over-the-counter (OTC) marketplaces where the parties customize the terms of the contracts. Trading options entails a wide range of risks and returns and calls for a high degree of expertise, dedication, and understanding. Options trading has several applications, including portfolio diversification, income generation, hedging, and speculating.

Options are dynamic, intricate financial tools that present a variety of opportunities and difficulties to traders. Although it can be costly and hazardous, options trading can be profitable and risk-managed. Consequently, one should approach options trading carefully and cautiously, and only by those who comprehend and value the nature and operation of options.

What are the benefits and challenges of day trading options?

OPENING AND CLOSING trades within the same trading day, without holding any overnight risk, is known as day trading. Many traders find day trading attractive since it has low capital requirements, significant leverage, and the opportunity for quick returns.

HOWEVER, BECAUSE THEY demand a great degree of knowledge, talent, discipline, and psychology, options trading and day trading are also among the riskiest and most difficult types of trading. The profitability and risk of each trade can be influenced by a variety of intricate and dynamic factors that are present in both options and day trading, including price fluctuations, time decay, volatility, liquidity, and market mood.

AS A RESULT, NOT EVERYONE should engage in options trading or day trading, and these activities should be handled carefully. A strong foundation in options theory and practice, a consistent and clear trading strategy, a dependable and user-friendly trading platform and tools, a resilient and strong trading psychology and discipline, and an ongoing, introspective learning process are all necessary for success as an options day trader.

THE ADVANTAGES AND difficulties of day trading options will be covered in this essay, along with some advice and suggestions for novice and seasoned options day traders.

Advantages of Options Day Trading

FOR TRADERS LOOKING to profit from brief market swings, day trading options can provide a number of advantages. Among the advantages are:

LEVERAGE: With comparatively little capital, you can trade options to control a sizable portion of the underlying asset. This implies that even a slight price shift in your favor can increase your returns. For instance, if the stock price climbs to $55 and you purchase a $100 call option that entitles you to purchase 100 shares of stock for $50, you can exercise your option and profit $400 ($500 - $100), or 400% of your initial investment. Leverage raises your danger, nevertheless, and makes it simpler to lose your entire investment.

Market flexibility: By trading options, you can profit from a range of market circumstances, including up, down, and sideways movements. You can make predictions about the timing, direction, and size of price moves using a variety of alternatives and tactics. To wager on a rising or falling market, for instance, you can use call options; to wager on a fluctuating or neutral market, you can use spreads, straddles, and strangles.

Portfolio diversification: By using options trading, you can lower your exposure to market risk and diversify your holdings. Options can be used to generate revenue from your holdings, build synthetic positions, or hedge your current positions. Put options, for instance, can be used to hedge against market declines for your stock portfolio, to generate a synthetic short position by purchasing a put and selling a call, or to sell covered calls and receive premium income on your stock investments.

Risk reduction: You can specify your maximum loss and restrict your downside risk when you trade options. Options come with a set premium and a finite lifespan, in contrast to stocks, which could completely lose value in a market catastrophe. This implies that, regardless of how much the underlying asset moves against you, the maximum loss you may sustain is the amount you paid for the option. For instance, you can only lose $100 if you purchase a call option for $100 and the stock price drops to zero, but you can lose $50 if you purchase the stock for $50.

Minimal capital requirements: Compared to other trading methods, options trading lets you begin trading with a comparatively little amount of capital. Options contracts are less expensive than the underlying asset, and you can control a sizable portion of the asset with a small initial investment by using leverage. For instance, you would need $5,000 to