What is an options trader? An options trader is an individual who makes a profit by purchasing and selling stock options. Stock options represent the investor’s choice to sell or buy the stock on a specific future date. Day traders buy a stock at one point during the day and then sell out of the position before the market closes; typically, on the same day, it is not advised to hold a position overnight. The most successful day traders will use a strict methodology to analyze potential turning points in the market for entry and exit points. Traders will often use technical analysis to detect potential trading opportunities throughout the day. Technical analysis is the use of chart patterns and technical indicators to find turning points in the market where buyers and sellers could make a profit.
A call option gives you the right, not the obligation; to buy a stock, and a put option gives you the right to sell the stock. If you believe the market is trending upwards, you would purchase a call option. If you felt the market was trending downwards, you would purchase, and put contracts. You would then sell your contracts to either follow your strategy or minimize a loss. Trading options are best to think of it as the probabilities of future price movement. Day traders buy and sell shares of stocks within the same day.
More on Options
With trading options, you can purchase a call or a put option. A call option gives you the right to buy a stock and a put option gives you the right to sell the stock. If you believe the market is trending upwards, you would purchase a call option. If you felt the market was trending downwards, you would purchase, and put contracts. You would then sell your contracts for either following your strategy or minimizing a loss. Before you invest a single dollar in day trading, you need to learn about the market, so you have an understanding of what the overall stock market is doing.
If you are the writer (seller) you have a different risk than if you are the holder (buyer). If you are a call holder and buy a call option, the upside potential is unlimited, and the downside potential is the premium that you spent. You want the price to go up a lot so that you can buy it at a lower price. If you are a put holder and buy a put, the upside potential is the difference between the share prices. You want the price to go down a lot, so you can sell it at a higher price.
If you are a call writer and sell a call, the upside potential is the premium for the option; the downside potential is unlimited. You want the price to stay about the same or even drop a little. So that whoever buys your call doesn’t force you to sell. If you are a put writer, and you sell a put, the upside potential is the premium for the option, The downside potential is the amount the stock is worth. You want the price to stay above the strike price, so the buyer doesn’t force you to sell at a higher price than the stock is worth.
Becoming Options Trader to Have an Employer
To become an Options Trader, you need at least a bachelor’s degree in a finance-related field. For example, business administration or economics. Necessary qualifications for this job vary by employer. Employers are more likely to hire you if you hold a relevant degree, through trade experience but it is also important for a career in options trading. Seeking work as a Trader or Market Maker first, or even learning more about the stock market by trading options using your own money, should help you develop the necessary skills and give you a chance to better understand the duties associated with the job.
A career as an options trader can be lucrative, but there is also an inherent risk in speculative investing. If an options trader works for a large firm, such as a hedge fund, they are paid a base salary and then earn commissions for profitably buying and selling options. If you decide to become an independent options trader, you make money directly from each successful trade. Options traders working for large firms rely on bonuses. The more successful your skills at trading options, the greater your bonus will be at the end of the year.
Break the Chains
But you don’t have to go this route, you can easily work in your shorts from wherever you have internet access. You don’t have to worry about the level of education you hold. You don’t have to worry about reporting to an office or hitting certain goals. Whatever your trades profits will be for you. You simply would need the right mentor to teach you how to trade and what not to do. Break the chains from the 9 am to 5 pm employee and become your boss.
My goal has always been to teach as many day traders to achieve their personal financial goals, whether they are novice traders or experienced traders. The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. I teach the working class how to earn $10,000 a month through day trading. I help my students avoid the challenges I faced when I first became a day trader. You will need a trading platform to execute trades; I like to use the TD Ameritrade thinkorswim platform.
The TD Ameritrade thinkorswim platform is easy to use and accessible on phones, laptops, and desktops. The thinkorswim platform allows you to have a paper trading account in which you can practice entering and exiting strategies. There are several stocks and options to choose from, just know you only need one. Having a day trading strategy is crucial, after all, anything without a plan is just known as impulsive. Impulse will lead you to lose money and, if you ever make a profit, it won’t be consistent.
You need to decide on a number you are comfortable using to start day trading. A good rule of thumb is an amount that if lost will not devastatingly hurt you. You also need to have a stop-loss number in mind. You are comfortable losing this number when a trade is going against you, and you need to exit. Keep your trading size small, so if a few trades go against you, it doesn’t wipe out your account. Remember, without capital you can’t enter into a trade, so you want to make sure you are making smart decisions.
You can lose more than you invested in a short period when trading options. As the holder of an option, you risk the entire amount of the premium you paid. But as an options writer, you take on a much higher level of risk. For example, if you write an uncovered call, you face unlimited potential loss. This is because there is no cap on how high a stock price can rise.
Summary: What Is an Options Trader
We all need something to believe in, and those beliefs push us to achieve our goals. Whether it be working for a hedge fund or kicking it back where ever your heart desires. I believe everyone should have the opportunity to become their boss, plan out their entire day, and only work as much or as little as they want. I can teach you how to day trade like the top 10% without a complicated strategy or any technical indicators, even if you are a beginner. Day trading involves a careful analysis of the fundamental circumstances and forecasting of future movement.
Applying a strategy allows a trader to overcome the probability of losing money. When you involve yourself in financial markets, there is a learning curve in which you will lose money. The risk is inevitable, but I can help you minimize that risk with the MK VIP program. Building your skills as day traders helps you take future trades and gets you close to your goals. Jim Rohn said, “if you are not willing to risk the unusual, you will have to settle for the ordinary”. I know you are looking for more than ordinary, or you would not have read this article in its entirety.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”