Making stock option picks with profit potentials, whether the market is up or down, depends on diligent market research and a thorough understanding of stock option fundamentals.
Finding profitable trading opportunities can be tough. But you don’t have to do all the work yourself. Some professional trader services, such as Market Taker’s Live Advantage Group Coaching, make stock option picks that they share with fellow market participants, saving individual traders time and effort.
But whether you do your own research or rely on a seasoned professional for your stock option picks, its essential to understand some basic facts about options trading.
Making stock option picks based on individual stock assessment requires an understanding of specific fundamental parameters. Traders may learn how to read an annual report and 10K stockholders report for income statements, past earnings, sales, assets, new products, and overall industry trends.
Stock option picks based on technical analysis is essential for success and requires the investor to examine the historical price movement and volume in order to determine price patterns and extrapolate future price movements. The single most important technical analysis technique is the simplest: Support and resistance lines. Specifically, horizontal support and resistance lines at the same price level in two or more time frames.
Stock option picks based on broad market analysis examines overall activity based on performance indices. Is the overall market bullish (moving up), bearish (moving down) or neutral (moving sideways)? The broad market will affect individual equities.
Stock option picks based on psychological market indicators attempts to interpret the facts and gauge whether a change from bullish to bearish (or vice versa) is in the wind. Successful options traders are frequently contrarians who buy puts in a bullish market and purchase calls in a bearish market — against convention.
The bottom line is, a lot goes into stock option picks. If you have not done so already, let me help you with analyzing your potential trades. Learn more here.
Senior Options Instructor