SteadyOptions Trading Blog

How much capital do you need to start trading options? This is a question I get asked a lot (along with “are 5%-10% per month returns realistic…). When starting out in options trading, it is definitely advisable to keep risk small and not start trading a large account straight away.

2017 shattered many records, but not the ones most folks think of. The records left shattered in many pieces in 2017 were all risk-related. Specifically, 2017 was the year that risk forgot.   Metaphorically, this was the year in which a drunk driver wearing a blindfold could drive across town...and not hit anyone or anything along the way.

“The right trading behaviors start as rules and evolve into habits.” – Brett Steenbarger Across sports, business, and entertainers the top performers are not the ones that have to think through their every action. The top performers have trained themselves to react at the right time and do the right thing in each situation.

To become an engineer you have to study 4 years, and probably another 4 years (at least) to become a good one. Why people expect it to be different in trading? What does it really take to become proficient in trading? Can you expect to double your account every 6 months after being an active trader for few months?

2017 marks our sixth year as a public service. It was an excellent and exciting year. We closed 113 winners out of 138 trades. Our model portfolio produced 169.1% compounded gain on the whole account based on 10% allocation. The winning ratio was 81.9%. 2017 was our first year ever without a single monthly decline. 

 The Delta, Gamma, Theta, Vega, and Rho options trading Greeks don’t make up an option’s price. Options Greeks estimate how an option’s price might change with a change in the underlying stock price (Delta, Gamma), time (Theta), volatility (Vega) and interest rates (rho).  The following infographic describes some of the options pricing Greeks myths.

In a year of uncertainty that included a recalcitrant North Korea, Britain’s continued exit from the European Union, multiple terrorist attacks, and global populist uprisings, to say 2017 was a turbulent year is a bit of an understatement—except, that is, in stock markets.

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

We've looked at a lot of momentum trades, but for now, we will continue to look at non-directional trades. This is a slightly advanced option trade that starts two calendar days after FedEx Corporation (NYSE:FDX) earnings and lasts for the 19 calendar days to follow, that has been a winner for the last 2 years. 

When taking an options position, there will be risk and potential reward. Options Greeks measure the different factors that affect the risk and the reward of the option position. The following infographic provided a brief explanation of the most important Greeks: theta, delta, gamma vega and rho and their impact on prices.

The mysterious volatility trader known as "50 Cent" has lost $197 million in 2017 betting on a spike in the VIX, which would accompany a stock market shock. 50 Cent is starting to slow down, deploying roughly 20% of the contracts he had outstanding over the summer. This story has been published in Business Insider.

"Investors should be indifferent to $1 in the form of a dividend (causing the stock’s price to drop by $1) or $1 received by selling shares. This must be true, unless you believe that $1 is not worth $1. This theorem has not been challenged since—except by those bitten by the “dividend bug.”