Options Trading Tutorial

In stock options should I sell quickly or hold on to it?

I am learning on a virtual trade account. I have done Okay.

Public Comments

1. it depends on the market situation and your financial position. if there is bulish trend you should sell quickly but if there is bearish trend you shouln't sell and wait, if u can and afford
2. What type options is this? Is this a Call option (right to buy) or a Put option (right to sell)? What is your position on the options? What is the market trend of the underlying stock? Lastly, would it make more sense for you to sell/buy a closing option than to actually execute the option and buy/sell stocks (may cost many times more in capital).
3. Some people say because they are called "traded" options you should "trade" them! Otherwise do something rather than nothing. Like anything you need reasons. Otherwise you are just relying on luck and you will eventually lose.
4. You must have your strategy first, then work according to your strategy, do not trade without trading plan, it will be very risky.
5. learn the binomial pricing model it will help.
6. Really depends on the situtaition but in general longer term investment can be more profitable. If you do your analysis on a 4hour chart for example you should look into holding your position for at least a few days. check here for trade ideas: http://www.ratemychart.com
7. Generally speaking, the riskier and more volatile the option, the quicker you should take profits (and limit losses). It is a great start to use a virtual trading account. One question I have: does it include virtual commission charges? Are you trading the same size positions that you would in real life? Examples: Option price buy @$1.00, sell at $1.20 No commissions, buy 20 contracts: Cost: 20*(100*$1.00) = $2000 Sale: 20*(100*$1.20) = $2400 Profit: $400, 20% Commissions: $9 + $0.75/contract With commissions, buy 20 contracts: Cost: 20*(100*$1.00) + ($9 + 20*$0.75) = $2024 Cost: 20*(100*$1.20) + ($9 + 20*$0.75) = $2376 Profit: $2376 - $2024 = 1000, $352 $752/$2024 = 17% With commissions, buy 4 contracts: Cost: 4*(100*$1.00) + ($9 + 4*$0.75) = $412 Cost: 4*(100*$1.20) + ($9 + 4*$0.75) = $468 Profit: $56, 13.6% With commissions, buy 1 contract: Cost: 1*(100*$1.00) + ($9 + 1*$0.75) = $109.75 Cost: 1*(100*$1.20) + ($9 + 1*$0.75) = $110.25 Profit: $0.50, 0.5% Also, make sure that you trade i n up-trends and down-trends , to test your strategies.
8. I think it is depending on the situation and what kind of stocks you are holding. Many bad trading tactics, just like warrants, bonds and funds, common stock shares and particularly those monetary investment of accumulator, or peg with certain currency are scams in a very smart way. Mostly are making you have some steady medium yield in the first one or two years then the suddenly come of bearish from the bullish. All the invested bonds, warrants (they make the fixation of the listed and actively trading share prices by means of leverage and speculating and eventually made all share holders lost all their invested monies). I have been living in this international capital of scams of real estate and stock share transactions, Hong Kong for more than 60 years. I personally know persons have lost from HK $ 10k to more than 10 millions in the above-described investments in the past five years. I think Hong Kong government is quite immoral by perverting those ignorant citizens addictive to horse racing, stock market investment and making 90% of them become losers. They can get an average of HK $ 5 billion duty tax per trading day to sustain the highest paid civil servants in this world. I your case, you should think about sell it quick while you are still earning. You should quit investing your money in the stock market. However, it is up to you. For the reason of answering your question, I selected a good article to let you to learn more about stock options regardless what is your personal goal and dersire. http://www.completeoptions.com/?OVRAW=Stock%20options&OVKEY=stock%20option&OVMTC=standard&OVADID=804329512&OVKWID=5292162012