Business & Finance Investing & Financial Markets

The Lazy Guy Road to Riches Pt - 2

In my last blog, I mentioned taking advantage of the Fed cut euphoria in the market to employ a straddle option position.
Many beginning option traders struggle with the type of option strategy to adopt for many different situations.
Most beginner option traders purchase straight call or put options because that is very easy to understand.
So why a straddle position? A straddle (or even a strangle, which I'll describe more in future) is a good option strategy to play when you believe the price of the stock or index is going to make a big move (either up or down) because of volatility, market forces, technical indicators, and/or some upcoming news that will affect the company or index.
However, you do not know which direction it will move, other than you believe it will make a big move.
A very useful tool I use often in analyzing volatility and option pricing is at http://www.
ivolatility.
com
.
You can use the Basic Calculator for free.
All you have to do is enter the ticker symbol and hit Go! Everything will be populated for you and you can select the Expiration Date and Strike Price that you want to analyze.
Hit Calculate and it will give you the value of the options and the greeks data.
Very useful tool and I highly recommend you bookmark this site.
Whenever you are analyzing your options' volatility to determine if you can purchase the option for a discount or sell the option for a premium, go visit this site.
So why did I choose to play the Nasdaq 100 Index (QQQQ)? The technical charts are indicating a bullish pattern for QQQQ.
It is at its 52 weeks high, which is also bullish.
Last but not least, because my mentors tell me so.
What mentors, you may ask? If you have read my blog post "The Lazy Guy Road to Riches Pt.
1″, you will know that I have a full time job, a family, a life basically.
However, stock and options investing takes time, efforts, and capital.
I can come up with the capital, but where do I squeeze in more time and efforts? That's where my mentors come in.
There are option trading professionals out there who devote 100% of their time to teach and pass on strategies and trading tips to folks like us.
In my last few years, I have subscribe to countless newsletters, trading software, and stock and option trading "gurus" reports.
Through subscribing to many different sources, I believe I have done extensive due diligence and shifted the wheat from the tares.
The "wheats" have taught me and guide me through many option trades in the past few years to help me earn a second income.
The "tares"..
..
well, I dropped them as quick as a hot potato.
In future articles, I will introduce you to some of these professionals and their services.
I treat my investments as I treat my day job in the business world.
I invest in the best and I let them do the work for me.
This allows me to spare up my time to manage my portfolio and enjoy life with my family while still earning a good living from my investments.
As I let my QQQQ straddle position play itself out in the next week or two, I will let you know how it has performed.
An important question about straddle is when is the right time to exit the trade.
As of writing today, the Nasdaq 100 index (ticker: QQQQ) has already broken through its resistance of $50.
60 and the indicators are bullish.
I have already exited my Nov 50 Put and will continue to ride my Nov 50 Call until the bullish run is over, or within 2 weeks (P.
S.
Remember, time erosion will reduce the value of the options so you should try to sell an option 1 to 2 month before expiration).
Why don't you join me on my journey and visit my LazyGuyOptionTrader blog.
By signing up for my free newsletter, you'll receive a free article on "How to turn your Loser Stock into a Winner!".
Patrick Lim aka Lazy Guy Traderp, up, and away!


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