| If you have ever played chess, then you know the | | | | major difference between the process will be |
| value of good workable strategies. You should also | | | | whether or not you select "call" or "put" options. You |
| be aware then of the fact that one single strategy | | | | must also have a reasoning for each transaction you |
| will not always work. This theory applies to the world | | | | make. |
| of day trading as well. No one technique will ensure | | | | For instance, if your goal is to simply hedge your |
| you yield the same results time after time. | | | | losses, then you will often purchase put options as a |
| For instance, there is not a "one size fits all" stock | | | | means of insuring your original purchase price on a |
| option trading system that you can use on a regular | | | | stock or commodity. This guarantees a specific selling |
| basis. While there are a variety of different | | | | price, but doesn't force you to see if the market is |
| strategies that can work for a particular issue or | | | | bullish. In this case, you risk only the price of the |
| trend, there is not a single strategy that leads to | | | | premium. |
| success each time. | | | | This type of approach indicates that an investor's |
| Before you can follow a good stock option trading | | | | best system is one that is designed to take into |
| system, however, the investor (in conjunction with a | | | | account overall market conditions as well as the value |
| broker) must identify their long-term goals and the | | | | of their primary holdings. This means that you must |
| amount of risk they are willing to take. They also | | | | have a plan in place when the market is "bullish" or on |
| have to decide the amount of money they are willing | | | | the rise or "bearish," if it is declining. A good system is |
| to dedicate to the purchase of premiums and trades. | | | | put in place to create income whenever possible, but |
| The most common activity in any strategy is the | | | | also guarantees against risk and loss as well. |
| actual process of buying and selling options. The | | | | |