Watch Full Training Webinar
This full-length training webinar covers an extensive amount of training on options. It is co-taught by Catherine Clay, a former Options Market Maker and Martha Stokes CMT. This webinar is a must watch for new and novice options traders and will surprise you with a far easier way to trade options for less risk and higher profits.
Successful Option Traders Know How to Read Stock Charts
In the market today, the stock option contract price follows the stock price more often than not. Since that is the case, half of the equat
ion is missed by studying the option alone. When you trade a secondary market, you must first study the primary market.
Options traders have to know:
1. WHEN the stock is going to move
2. In which DIRECTION it will move
3. HOW MUCH it is expected to move
4. And HOW LONG it will take to move sufficiently enough to make the trade profitable.
Sign Up to watch the Video or read the eBook on this page to experience how we teach trading options in our
Stock Charts tell you:
- When to buy an option.
- How long to hold the option contract.
- Potential Profits of that option trade.
- The risk of the option trade.
- When to sell the option.
As an example:
Resistance in the chart tells us how far, how many points, the stock can move before it begins correcting down, which is the price range where the exit should be anticipated. Support in the chart tells us how many points, or dollars, there are at risk.
Every time you trade an option, you must consider the actual price movement of the underlying stock. If you simply rely upon implied volatility or the Greeks for the option, you miss the most important aspect of your trade. This is just like deciding how much you want to pay without knowing what you’re buying yet.
No matter what option strategy you want to use, understanding the underlying stock-when it will move, how much it will move, and for how long it will move-is critical to your success. If you want to be an options trader, then give yourself the ultimate asset of learning how to read stock charts. This alone will save you from countless contracts that expire worthless.
How do you find this information?
Here is an example:
1 – Study of the daily view stock chart example below which shows that a buy signal with confirming indicators has formed to tell us that the stock is going to move up.
2 – Resistance in the monthly view chart below reveals how many points the stock can move before it begins correcting down. This gives us the price range of the stock, where the exit or the option trade should be anticipated. Support in the chart tells us how many points or dollars, there are at risk upon the entry.
3 – The trendline pattern in the first chart, tells us this stock tends to move sideways for roughly a month between runs up that gain around 3-4 points each. This makes an option expiration date of 3 months out reasonable.
Now that you have studied the stock chart, you have the information needed to look at the option chains and find the right option to buy. You now know the Strike Price and the Expiration Date needed on the option contract. In addition you have a plan for the trade at the outset, which is essential to trading success.
Every time you trade an option, you must consider the price movement potential of the underlying stock. No matter what option strategy you want to use, understanding the underlying stock as to when it will move and in which direction, how much it can move, and for how long it is likely to move is critical to your success.
If you want to trade options, then give yourself the ultimate asset of learning how to read stock charts. This can save you from countless contracts that expire worthless.
Sign up to watch the Video or read the eBook on this page to
find out how the right education on trading options can make all the difference.
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