Options trading. i have only been trading options for about 6 months. Here is what I have learned.
1. Before attempting to trade options you must be able to read and understand charts--slo sto, macd, adx, trix accumulation, volume, and the moving averages. I really am a big fan of oversold stocks turning up on the slo sto daily chart. weekly and shorter term charts are important as well.
2. As AD says, pay attention to world news etc.
3. When looking to get in an option look at the call and put sides to see where the heaviest open interest and volume is. Dont just look at one month look at a few to look for consistency. The call side will give you your ceiling and the put the floor. Trade those ranges. Dont get greedy because when these ceilings and floors are hit heavy pressure will move it the other way.
4. Also, look at the implied volatility and historical volatility and the graph of where the option has been trading to see if you are getting a "good" price.
5. Play volatile stocks for shorter term trades but play slower movers like a CAT or DE for a little longer term. Don't get trapped by time. I like to buy at least 6-8 weeks out on most stocks. GE is a prime example of this.
I'm sure I have left out alot but those are my major things to be aware of. Good luck
Also, it is nice when you have a play you think is good to post it so we can all make money together!!
