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Stock option trading before an anticipated event is one of my
technique to earn some money with stock options. You can say that it’s a form of momentum trading. There are many different options trading techniques out there but for me I like to buy a straight option (call or put) before earnings announcement. However, I do follow certain conditions before buying straight options for stocks prior to earnings announcement.
I would also sometimes trade an option If an event has just occurred, for example,
during a
stock splits
announcement. Once again, I would follow certain conditions before I decide whether to
a stock option for stock splits.
As an option is a depreciating asset, meaning its value will slowly be reduced to zero by expiration date. When you purchase an option , you are most probably holding it for a short period of time in the hope to gain profit
in anticipation of an event to happen before the option expiration
date. But if the event did not happen or happen contrary to what you have anticipated, you would stand to lose the
entire premium that you’ve paid for the option contracts when they expired worthless. So, be very
disciplined with the money you spent for every option trade,
preferably 5% or less of your total capital committed in every option trade.
How do you trade stock options? Under what circumstances do you trade them? Perhaps you would like to share
your stock option trading experiences with fellow options traders in the
forum. It's certainly beneficial to learn from each other. I’m also curious whether you have
achieved consistent results with stock option trading techniques such as credit or debit spreads, straddles, strangles, delta-neutral, butterfly, condor. Share with us, all right?
Yours sincerely
Tony Chai
About Me
Tony Chai has been trading stock options, particularly
US stock options, since he graduated from Live Freely Options Trading
Seminar in year 2004. His stock options trading technique involves
mainly trading options based on earnings gapping analysis. In his
stock options trading web-site,
you'll find a number of informative
articles written by himself and seasoned options traders to
sharpen your stock options trading skills. Tony also record his
stock options trades and his analysis for initiating those options trades in his
stock options trading blog.
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