Trading Options at TTI
Options are a recent addition to TTI and we have a very specific way of trading them. We are taking advantage of Simon's directional calls in futures and use the options to take this trades. Oftentimes we take trades in Options that we don't take in Futures because the Stop in futures would be much higher that we normally like to have.
Because we trade Options differently we also don't use a lot of the lingo that Options folks are using. There is no reason to spend large amounts of time learning about the greeks or all the complexity of options. Of course if you want to become a fully developed Options trader we will educate you in much more details but this is not needed at the very beginning.
For the traders that look at the various trading instruments and wonder what should learn to trade first here are why you should consider Options in your portfolio.
Below is the definition that may sound intimidating if you are hearing these terms the first time, however no need to be alarmed. At The Trader Institute we are very much oriented towards the beginner traders and we provide education in options trading in addition to the other trading instruments.
In just a few words an Option it is a standardized contract transacted between two parties. The contract offers the holder (buyer) the right, but not the obligation, to buy (for call options) or sell (for put options) a security at an agreed-upon price (strike price) during a certain period of time or on a specific date (called the exercise date).
When you hold a Call you have the option to buy at certain price, therefore you want the security to go up above the strike price by time of the expiration of the contract. The opposite is true for put options, the holder of the put option wants the price to go down below the strike so he can profit from the fact that he is selling above the current market price.
It may take a little while to fully internalize what this mean but at TTI we like to practice a lot to be absolutely sure the concepts are fully understood.
Key reasons we trade options at TTI:
- Flexibility: options can be used many different ways, this is because we ca buy and sell both calls and puts and we can combine them various ways. If you get a little bit deeper into trading options you will start hearing things such as “vertical spreads”, “iron condors”, “butterflies”... and a zoo of name that have been used to make these trade easy to remember. In the beginning all these things are not needed but as you get more advanced you will be start using some of the more complex option trading strategies.
- You can achieve high levels of leverage with a defined downside risk. This is both important to the trader with small account but also to the large account owner that wants to take advantage of a significant market move without using his entire account.
- You can define your risk upfront by the specific strategy you use. This is key if you have a small account and want to make sure you are not running it over. Hence you can trade them even if you trade “part” time, you can even have “set it and forget it” trade, (not that I would ever recommend forgetting about your investments and trades!)
- You can also use them for hedging for example in your retirement portfolio. Even if you may not decide to trade them actively there may be times when you will decide that you need and want to protect your portfolio. Options come in handy and using options will allow you to keep your position on and not being forced to sell it and therefore suffer some tax consequences.
- Can be combined with stock to increase the yield of your position using strategies such as writing covered calls
- Can be used to enter positions at prices below the current market. A rather straightforward strategy that it is very straightforward
- With options you can decide trade stock moves in any timeframe of interest to you. Yu can use options for day-trading fr example for accounts that cannot purchase large amount of stock or ETF.
- Trading options does not have to be exclusive, one can trade them in addition to your other trading instruments (futures, forex, stocks, ETFs...) or even in combination with them.
How to start online trading options?
Now you may already be asking yourself why not everybody is trading options online. Well first I should mention that more and more investors and traders are indeed adding options to their toolbox. But the one issue that I see from talking to many traders is the perceived complexity of the option and the complicated “lingo” that is being used by many professionals.
However options trading can be explained in simple terms and taking the time to understand how to trade them will pay off in the long run. The fact is that at TTI we are providing personalized and in depth education and mentor-ship in the area of trading options.
Let me emphasize this: at the Trader Institute we take your trading education seriously! We offer multiple sessions of live sessions every day (in futures, forex, CFDs and options) and we also have educational evening sessions where we cover a lot of the issues that come up during the day.
During the Asia trading room session we offer direct mentorship to our members and everybody has a chance to ask questions.
We offer free trials both for the morning trading session and also for the Asia session. Our moderators are more than willing to answer your questions and get to know you and make sure the trading education at TTI is the right thing for you.