Option Rules

"There's a fine line between genius and insanity. I have erased this line."
Oscar Levant (1906 - 1972)

Ideal Equity Options

BETA: Greater than 1

Minimum Months to Expiration: 2-3

In the money calls and puts

Minimum Equity Volume: 100000k shares/day

When and where to buy: I prefer to buy options when the stock is trading in extreme ranges.

Never Take A Position When...

A stock is trading within an RSI of 40 to 60. It could go either way.

You Don't Know the Industry (You have to know the industry you are trading).

Stocks with poor volumes.

Some Bozo offers a tip on Penny Stocks (stocks under 5) unless they are optionable and listed

OTC Stocks...........avoid these all together.

When buying calls, I like beaten down companies with solid financials who are trading with positive fundamentals and technicals. I also enjoy buying puts on bloated companies who are due for a correction and have financials with weakness. I have a consistent trading record and won't divulge the bulk of strategy online as it come from much work and is valuable. In my mind trading is both art and science. While it is a craft that is not for the faint of heart, it is one worth mastering if you are willing to put it on the line and keep your emotions in check.

Other Advice:

If you have a desire to trade the following is the advice I have to offer:

  • If you have never taken a class in finance, enroll somewhere.
  • A few accounting classes wouldn't hurt either. It is important to be able to read financial statements.
  • Make yourself aware of the many markets there are and the many financial products that are available. Option trading is what I do best but there may be other areas that appeal to your aptitude and interest.
  • Learn to paper trade before investing real $$$. The patience you develop will help in the long run.

HOME

CONTACT DON