Trading Option for a Living
The trading of options for a living is a difficult dream.
Don't let any online courses make you otherwise. There are promises of constant, steady income using naked puts or iron condors. There are risks and costs which I am still trying to figure it out too.
However, If you have patience and ambition, you can do it for a living I feel, even with a small amount of money but don't expect to get rich.
Options allow traders the flexibility and leverage to boost their returns. If you can deal with that risk and know how to analyze the market, you can make profits from upside, sideways, and downside movement of the market.
Benefits of Options Trading
Option trading has many benefits. Some major benefits are given below:
When traders place their trades through their online brokers, you can take advantage of great leverage. For retail traders, access to funds is limited, so make sure that you are making effective use of those funds. You can use leverage to make effective use of those funds. In options trading, you can control positions. You can’t control the 100 shares of Google in the only fraction of a cost. So, you can enjoy leverage in options trading.
Options’ trading is different from day trading, and you wouldn’t be sitting in front of the monitor all day. You can check the position with the help of a chart once a day and can guess whether the situation is suitable to trade options. Options trading is perfect for those who have other commitments like job, family, and other businesses. You can trade options for a living, but it doesn’t mean that you are living to trade.
Trading options is different from other trades. In options trading, there is always a chance to make profits from up, down, and sideways movement of markets. It is a powerful and attractive tool because it allows traders to make a profit regardless of the market situation. So, for a trader who is looking for trading options for a living, it is a good thing.
Risk is part of almost all businesses. If you can use your strategies well, then there is a limited risk. For every trader, capital preservation should be the first job.
How to Use Trading Options For a Living?
It isn’t difficult to make an entry in options trading. It is difficult to find an online broker, a perfect trading system that suits you, markets that suits you, and many more. I would say you can trade options for a living. Now we will discuss how to use trading options for a living in detail. It will probably help you to become a professional options trader.
Most new traders make this mistake. They make entry into options trading without any plan. They overestimate the probability of winning in options. 95% In-the-Money means you will lose all your money in 20 trades (provided 95% is even accurate in the first place. The truth is stats can lie).
When you don’t have a road map to follow your emotion can lead you to make mistakes. Choose a trading system that has clear entry and exit points. Make sure that there is no guessing, and everything is outlined.
Traders trade with too many markets, even without knowing them. The best part of trading options for a living is that you can trade some high flying stocks. If you want to trade full time with confidence, we would suggest you trade in EFT. When you trade with the same list of names, it allows you to see how products move. For high frequency, you can consider Apple and Netflix. On the other hand, for lower frequency, EFT is the best to get full exposure of stocks.
People shy away when it comes to considering the stock market as a source of income because they think the failure rate is high in trading. Some people will struggle to get success in trading, and it happens in other businesses as well. One reason for failure is they take too many risks.
In options trading, use a proper strategy for a minimum risk regardless of your account size. It means that you spread your account in different products instead of investing all in one or two positions. When you can understand how to deal with risk, you are on track to become a successful options trader. When you diversify more, your equity curve will be smoother. While diversifying, make sure that you are considering weekly and monthly options as well. In other words, it means you are not putting all your eggs in one basket.
Do Options Traders Make Money?
It isn’t that simple to answer this question. Yes, options traders can make money if they prepare themselves to trade options for a living. For example, if you earn a profit of $275 in 12 days, some people would say, it’s not enough for a living, yes, it’s not. Options traders have lots of positions running, and they can make money in any market condition. Much like any other business, you can make trading a profession, and the more you are prepared, the higher the chances of success.
Trading options for a living seems good when you are prepared for it. Trading options is an attraction, but it is risky as well. Whether you want to do it full time or part-time, it can be exciting to spend a few hours a day for trading options. Now the question is trading options for a living is realistic? Is it a good idea to quit a job and do options trading?
In the beginning, it’s not good thinking to quit a job, especially when you are a beginner. When you start making profits, you can think about quitting a job. Yes, you can make it a full-time business, but there are lots of risks as well. If you can manage risks and have control, then you can become a professional options trader. Options trading has lots of benefits like flexibility, leverage, minimal time requirement, and profit in almost all market situations.
Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.