Option Trading is about maintaining risk while maximizing profit. People call it the double edged sword, because when used incorrectly options can easily blow up an account. Option trading allows us to leverage our trades, but this leverage can work for or against us.
Appropriately used leverage can allow for better portfolio management in a smaller account also. The reason for this is that each position takes less money, therefore, allowing the overall portfolio to be sectioned off via individual trades.
Option Trading Breakdown
For example, let us look at our portfolio from the above video.
We began our account with $1,555
At the end of this year we had $3,936.22
This equates to a return of 153%
During 2017 we made less than 50 trades, and practiced strict risk management. Every trade was carefully considered, and if unsuccessful would not lose over $100.
You may have heard the old sniper saying, “aim small, miss small.” For traders this means that we are looking for base hits. By finding small wins consistently we have fixed the problem of losing money. This may not be the sexiest form of trading, but it is the right type of trading. This is the type of trading that will make you rich, and although money is not everything it allows for a more comfortable life.
Are you into options trading?
Our Stock Talk videos try to highlight the big movers that we can take chunks out of in our options trading group. There is no reason to set through large declines in an option, but options are great to take advantage of larger moves with. The concept of One Stock One Trade formed out of me looking for one stock where I could play the options over multiple months. Playing an option once is good, but being able to jump in and out of the same stock multiple times makes trading easier and more profitable. If you like this video please like, comment, and share.
We do trades like to this on all timeframes in the options trading group.
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