Options trading is undoubtedly a risk business, but it is a great opportunity for experienced traders to make a substantial amount of money. It is important to familiarize yourself with the basics of options trading before you make the leap of engaging in your first trade. For instance, the first step is referred to as ‘The Greeks”, and it entails finding out how delta and other factors directly impact the trade that you are interested in making.
- Prayer is not necessary in options trading. It is a trade that is based on skills and one’s ability to tolerate risks.
- Some of the factors that options traders who consistently make money understand include the Greeks, implied and historical volatility, and hedging.
- In the early days, before computerization and algorithms took over the options trade, one could make a hundred percent return on his investment per year.
“The average investor must be acutely aware of Liquidity. While the market maker is happy to trade with wide Bid/Ask Spreads, the customers must insist on reasonable value to trade. They can’t settle just because they think they want to trade a particular vehicle.”