Institutional investors like the options market due to its risk profile and its rewards potential. However, in order to be a successful options trader one needs to have a set plan. A retail trader needs to find an options trading strategy that does not include a lot of trades due to the high level of fees in the options market. The correct strategy depends on the volatility of the stock and the overall movement. Some ways of options trading include covered calls, covered puts and vertical spread trades.
- Retail traders often lose money because they have no plan pretend to utilize a one size fits all plan.
- When stocks are sideways they are bearish, or bullish, and tend to move relatively slowly.
- Sometimes a stock option can fall through because a stock is lackluster and having very little motility.
“There are numerous strategies out there which have been described in various books. But not all are useful to a retail trader.”