I will be doing a 30 days Stock Option Trading challenge and posting here all of my trade results.
At the end of the 30 days, I could be walking away with a loss or a profit depending on my strategy and emotions for the current 30 days of trading.
This is to give you an idea or basic understanding of what options trading could do potentially.
Disclaimer: All information stated here are only for illustration and educational purposes. Its not financial advice to buy or sell any financial products. Please perform your own due diligence before investing as always.
Background
- For those who are not familiar with Options Trading, besides purchasing stocks in the stock market, retail investors like us can also purchase options in the stock market.
- Options is available in the US market. Unfortunately Options cannot be traded in the SG market.
- Whenever you buy an option, you are essentially buying into a contract of shares of a company / ETF.
- The unit of measurement (UOM) in each contract is called lots. Each lot size is minimum of 100 shares in that particular company or ETF index. If you buy two lots, means 200 shares of that company / ETF.
- Each options contract that you purchase has an expiry date. During the expiration of the options contract, if your strike price is "in the money", you will make money when you close the contract and if its "out of the money" you will lose money when you close the contract.
The definitions and strategies are more complex but I am going to just state these in simple layman terms for now.
- You can buy a Call option at a certain strike price. When the current stock / ETF price is higher than your strike price, you will start to earn money on your options and vice versa when the price is below your strike price.
Buy Put Options (bear run)
- You can buy a Put option at a certain strike price. When the current stock / ETF price is lower than your strike price, you will start to earn money on your options and vice versa when the price is above your strike price.
Sell Put Options (bull run)
- You can sell a put option at a certain strike price. When the current stock / ETF price is higher than your strike price, you will earn a fixed premium amount upon contract expiry.
Market Outlook 6th - 9th July 2021
- S&P 500 was showing a normal see-saw upward trend with price corrections occurring on the 6th July and 8 July which was for 2 out of the 4 trading days.
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Week 1 Progress 6th - 9th July 2021
- All those companies / ETF that I bought for options were carefully vetted with a set of criteria before I placed them into my stock watchlist.
- Thus, their fundamental analysis have been completed beforehand and now the focus is on the technical analysis portion which is to buy and close the options for profits.
- The following options have been closed at this point of writing.
- Positive gains of 58.01 USD.
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