There are a few different types of option traders. One kind of option trader is very aggressive and known as a “day trader”. Day Traders use a lot of money and are in and out of their trades all day. When you trade this way, you aren’t usually able to hold a position over night since this style requires constant attention. This is an incredibly stressful way to trade. I had a conversation with a day trader who had to work sixty to eighty hours a week in order to trade options successfully. But how successful was he really? If he was having any success and making money, why did he call me looking for new ways to trade options?
The other flavor of option trader is one who trades to make money, but doesn’t spend endless hours every day in front of a computer. There are multiple types of strategies that can be used to trade like this. One of the more popular strategies is called a Credit Spread. Traders do Credit spreads on stocks and on the indices. Whatever way you choose to trade, Credit Spreads are still very risky as they cannot handle the drastic changes that happen in the stock market.
Now, those are the two common styles of option traders. There is another type of trader that isn’t quite as common. This option trader trades over earning reports. It can be a really exciting way to trade options and can prove to be very rewarding. There is a lot of risk and luck involved in trading this way but back testing can help you predict how your over-earnings report will go, but there is still a lot of uncertainty.
These styles clearly involve a lot of risk. There is another type of option trader who is managing his savings account and prefers a less risky way of trading than the previous 2 styles. A trader looking to avoid some risk will trade strategies known as the Broken Wing Butterfly and the Unbalanced Condor. These two strategies are two of the lowest risk strategies that can be found in option trades. They allow an option trader to construct trades that have low risk from the start, normally only one to two percent risk is theoretically taken on a given trade.
San Jose Options offers a course focused on the low-risk type of option strategies mentioned above. While some options mentoring courses are slowly starting to catch on, San Jose Options has been training students on these strategies for many years. They specialize in the Broken Wing Butterfly and Unbalanced Condors. Their course is designed for those who are retired and those who wish to invest with options without risking as much as the usual option trader does. If you would like to learn safer option strategies, then I highly recommend that you check out their options mentoring program.
categories: finance,investing,options,money,business,education,stock market,retirement
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Junior, Johnny M. "Risky vs Conservative Option Traders." Risky vs Conservative Option Traders. 2 Jul. 2010. uberarticles.com. 24 Jan 2015 <http://uberarticles.com/finance/what-type-of-option-trader-are-you/>.
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