Options are very powerful instruments once you get a thorough understanding of how they work. However, they are very risky and only when you are ready, should you decide to trade them. A whole portfolio can be wiped out in a mere seconds and in my journey trading options, I have lost some money. However, I have gained more than I have lost. As a matter, of fact I took my account at Robinhood to $5ok+ this year. Look at the screen shot below (*all my trades are real and verifiable for all the doubters out there*) I started with about $4,500.
Rules in Option Trading
- Only invest money you are not afraid to loose
- Always set your profit target in your mind and do not be greedy.
- Always capture your profits
- Minimize losses and cut loose bad trades as quickly as possible
- Adjust your option trading strategy as needed
- Never buy option contracts that are way Out The Money
- For a particular stock, make your trades on a catalyst driven event
- Never have more than 5 positions open
- Study all your trades to learn from success and failure
- Don’t trade blindly