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Jul 04

Options trading as business of a full time trader

optionstradingbusiness.comOptions trading as a business? Can it really be done? These are some common questions in our mind when Mervin and I explored the path to becoming a full time trader, for US options market at least.

First thing first, why US options market? Well, local bourse in the country I live in is not as liquid and as large as US market for trading, in my opinion. Stock prices’ momentum movements are scarce, hence not volatile. As a day/swing trader myself, I like to see high volatility in movement of stock prices. Long 1-minute candlestick bars are the best, doesn’t matter if it was green or red. Then, options… why options instead of the stock itself? Because I am not rich enough, you see – 1 unit of AAPL share is about USD600 today! Yes, just 1 share. If I were to buy 1 lot (100 shares), that’s USD60,000 investment in one stock, one basket. And that’s about a year and a half of the salary I earned from my fixed employment. So, trading options (to the stock) rather than buying the underlying stock itself is something more affordable to me. Options prices are a fraction of 1/10 (or may even be lower) of the underlying stock price. Ya.. most people say that options has a bigger risk exposure, but I assessed my affordability and this is just IT, there is nothing else for me to choose other than OPTIONS. And yes, there is Forex trading, but I just feel that it is just not my cup of tea. So, options it IS!

Mervin treats options trading like a business, I couldn’t agree less. How so? Options traders have sets of procedures and rules to follow when we trade, a trading system, just like any businesses which have their own sets of policies and procedures. We should not be (or at least try not to be) influenced by emotions when we trade, as in business are usually driven by objectives and numbers, not sentimental values. Businesses engage in the buying and selling products/services to gain profit, we on the other hand have only one product, stocks (and its options). All good businesses manage based on ratios and numbers, we manage the numbers in our trading system to stay profitable. All businesses have profit forecast and strategies, we too have a plan and strategy for each trade, to minimize risk and to exit in style even if the market has turned on you.

But the most important factor in treating options trading as business, is the persistence, the believe that the business is RIGHT for you and you can achieve success and financial freedom with options trading business. As many businesses may experience obstacles, so does options trading. I mentioned that I had my account wiped out a handful times, did I not? I learned from the mistakes, I improvise on my trading system, my psychology and I persisted in options trading because I still believe it is the RIGHT business for me. And the best thing, once you have learned the principles of options trading, it will never change (at least in my lifetime, I opinionate). I can use the knowledge over and over again to trade this business with the same one product.

So, is options trading the RIGHT business for you? Learn more now.

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