Option trading advice – LEAP Into Future Profits!
Another one may look at a ship in a tempest as an intrepid roller-coaster ride, while another human sees a similar scenario as a hurricane which has a death call. In his book, “Trade Your Way to Fiscal Freedom”, the respected Yankee trick cyclist Dr Lorry Tharp debates the job psychology plays in trading success. Jump options that don’t expire upto two years into the future give the purchaser much more time to be right about the future direction of a stock and at the same time offer tremedous leverage. So how can we use Jumps to speculate on the future direction of a stock ( down or up ) and at the same time reduce our risk of losing all our cash on them? Well let me share with you two simple Jump option trading techniques that have worked well for me over the years in both bull and bear markets. TIP : If you think a stock will go UP over the next 1-2 years, then buy Call option Jumps on it and at the same time sell the call options ( one or 2 strike costs out of the cash ) that expire in the present month. If you think a stock will go DOWN over the next 1-2 years, then buy Put option Jumps on it and at the same time sell the put options ( 1 or 2 strike costs out of the money ) that expire in the present month. By doing this you’ll effectively be getting cash back on your investment every month that you hold your Jumps . Over the long term this can not only offset the time-decay of your Jumps , but also offer you some disadvantage protection, if the stock go in the other way that you would like it to. You should not permit this to happen as the moment you are allotted you’ll lose whatever time value is left on your Jumps . Wagon Tharp debates the task psychology plays in trading success. what precisely is the psychology of the mind? In brief the psychology of the mind makes reference to your thinking and emotional actions and replies to any given situation. Though, your target in the market is to maximise your profit and minimize your risk, thinking and feelings regularly make this quicker said than done. This clouded judgment obviously contradicts the trading proverb : cut your losses and let your profits run.
