Options Trading Return on Capital
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The stock market is in free fall, nearly into official bear market territory. As we have said it has more to fall until the causes have been remedied or countered. If you have followed our Sitreps or situation reports you are aware that one can make money trading options when the market is falling, rising, or trading sideways. If you are considering options trading you would like to know the potential options trading return on capital.
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Questions to Ask Yourself Before Trading Options
There are four questions that one ought to consider before deciding to trade options and with every option trade. What degree of risk will you accept in return for a potential profit? How long are you willing to tie up your capital in a given trade? What do you expect to gain in return for how much risk in each trade? And what is your likelihood of success? Additional questions include how much time you are willing and able to devote to researching possibilities, actively trading, and honing your skills. The last question for new traders as well as those with experience is this. Is it wise to trade alone in an extremely volatile and treacherous trading environment? Your best choice may well be to join one of the trading squadrons at Top Gun Options where we are currently “printing money” as the market heads down just like we did during the Covid crash and the crash recovery.
Hedging Risk in Options Trading
When you follow our Sitreps you will notice that there are trading strategies like bear call spreads, bear put spreads, bull put spreads, and bear put spreads that we use repeatedly. This is not because there aren’t any more profitable approaches but rather because these trading strategies help you hedge your risk while giving you a strong profit potential. It is easy when setting up a trade on a platform like eTrade to check the probability of trade success before executing the trade. As we always say when signing off, make sure you hedge.
Set Up and Walk-away Trades
Many investors only invest in very secure and stable companies because they want to be able to sleep well at night and not constantly fret about what might happen to their investments. When you hedge a trade properly you know exactly how much the trade will gain at the maximum and how much it will cost if things do not go as expected. When you join Top Gun Options you will learn the basics of trading options and then the details. Because you will be working in one of our trading squadrons you will have the benefit of seeing everyone’s trade as they post them. You can use this information to improve your own trading and if you are able to respond quickly you will be able to make the same trades in the same time frame. We are not investment advisors at Top Gun Options but have been trading options for more than 20 years with steady and routine success.
Getting a Glimpse of the Future With Top Gun Options
The beauty of options trading is that you are not locked into a given stock position and thus can change your strategy on a dime. Over just the last couple of years we have not predicted this year’s stock market demise but correctly called the start of the Covid Crash and the recovery when the Fed opened the tap and flooded the economy with money. At Top Gun Options we follow the actions of the DRINCs, Democrats, Russians, Iran, North Korea, and China as their actions affect the markets. We see this year the disruption caused by Russia’s invasion of Ukraine and China’s continual lockdowns that disrupt the supply chain. When you work with Top Gun Options you will be able to stay ahead of the curve and know when to pull the switch on profitable trades.
