🔑 5 Key Concepts You MUST Learn Before Your Next Options Trade 🧐

[Image] February 22, 2024 🔑 5 Key Concepts You MUST Learn Before Your Next Options Trade 🧐 Happy Thursday, traders. Ben here. So, you want to become a master of options trading… If the answer is yes, you're in for an exciting (albeit challenging) journey. But trust me, it’s worth it. In the current market landscape — where most risk assets are red-hot, sitting near all-time highs — disciplined options trading can lead to astounding results. I never would’ve achieved my 93.3% win rate over 60 recent trades* without a deep understanding of how options work (and some major help from my [Spyder Scanner](. But there's a catch – the options market is not as straightforward as the stock market. Options trading comes with its own set of rules — five critical concepts — your understanding of which can make or break your performance. That said, if you learn these rules and trade according to them, you can potentially make more money in the options market than you ever would trading common shares… The Key Differences Between Stocks and Options When you trade stocks, you're temporarily buying a piece of a company, becoming a shareholder. The success of your trade depends on the share price increasing over time. It’s that simple. Options, on the other hand, work differently… An option is a contract that gives you the right, but not the requirement, to buy or sell a stock at a certain price within a specific time period. Options come in two main types: calls and puts. A call option gives the right to buy, while a put option gives the right to sell. Unlike stocks, options have expiration dates — if they're not used by then, they become worthless. In general, options move faster than stocks, amplifying your potential for quick gains and losses. Many traders come to options expecting that they can trade the same strategies they did with stocks and make more money faster without changing anything. But again, attempting to trade options the same way you trade stocks can lead to serious trouble and potentially brutal losses. Trading options requires more careful risk management than regular stock trading because the prices move so much quicker. CAUTION: A small dip in the share price (that would’ve been easily manageable on a stock trade) could cause your weekly call option to lose as much as 50% of its value in minutes. But options trading isn’t just about predicting the stock’s direction… You also need to correctly guess when the movement will happen and how big the price changes will be… Sponsored 5 Concepts Every Options Trader Must Understand Here are five concepts to focus on if you’re a stock trader looking to explore the options market: 1. Time Decay The two most important aspects of options trading are direction and time. Intrinsic value covers direction, while extrinsic value covers time. And time is what you’re paying for as an options trader. The more time is left before your contract’s expiration date, the higher its extrinsic value (and overall premium) will be. Options lose value as time passes, which is known as time decay. When trading options, you need to a) pick the right direction and b) determine when the change will happen. 2. Implied Volatility Volatility, or how much a stock's price changes, has a big impact on options prices. In the options market, implied volatility (IV) is an estimate of a stock’s future volatility. It reads as a % figure attached to options contracts. Understanding IV is crucial. Both puts and calls are more expensive if the contract’s IV is higher. On the flip side, if a chart looks like a flat line with few price swings, the IV on those options will likely be lower (and the contracts less expensive). 3. Choosing the Right Position Size Options can quickly multiply gains and losses. Choosing a position size that fits your risk tolerance is vitally important to make sure you can get through unsuccessful trades without losing too much. Determine how much you’re willing to lose on a single trade and do not exceed that position size until you’ve grown your account considerably. However, you also need to know when to size up and get aggressive on perfect patterns. If you’re leaving a lot of money on the table, so to speak, it will be far more difficult to compound gains and build your account to where you want it to be. 4. Choosing the Right Strike Price Selecting the right strike price, especially considering how you think the stock will perform, is key in options trading. Try to choose a strike price that will deliver solid returns if you’re correct about the timing and direction of the underlying stock, but won’t lose 70% of its value in minutes if you’re wrong. For me, this generally means avoiding zero-days-to-expiration (0DTE) options and very long-dated LEAPs. But I’ll make exceptions if I see a huge sweep on my [Spyder Scanner]( that corresponds with a great chart. SPOILER ALERT: That’s the great thing about following the ‘smart money,’ I rarely need to choose my own strike prices or expiration dates — Wall Street does that for me. 5. Entries and Exits With options, you need to know when to enter and exit your positions at the opportune moment. When you're up on unrealized gains, you need to protect your profits. This might mean exiting earlier than you expected to keep your gains intact before time decay takes them away. Or, when you’re stuck in a losing trade (it’ll happen) … the importance of cutting your losses immediately. Losses can compound much faster with options vs. stocks and you must keep your trades on a short leash for this very reason. NOTE: This is why I send exact entry and exit instructions with every [‘Smart Money’]( trade alert — I want to take the ‘guessing games’ out of your buys and sells. For anyone trading stocks … the options market isn’t out of reach, but trading it requires special considerations and a lot of studying. Don’t jump headfirst into options without understanding what makes them unique. That’s how you become part of the 90% of traders who fail. But if you take a cautious and calculated approach to learning a new market, you might find that options open up an entirely new world of trading possibilities. And speaking of trading possibilities, let’s get to… 💰The Biggest Smart-Money Bets of the Day💰 $2.33 million bullish bet on TSLA 02/23/2024 $195 calls @ $3.44 avg (seen on 2/21) $2.24 million bullish bet on AMZN 02/23/2024 $170 calls @ $2.01 (seen on 2/21) $1.41 million bullish bet on NSC 04/19/2024 $270 calls @ $5.60 (seen on 2/21) Happy trading, Ben Sturgill P.S. On Tuesday, February 27th, at 8 p.m. Eastern, legendary Wall Street veteran, Jeff Zananiri, is breaking rank from the financial establishment... And revealing an obscure market loophole some of Wall Street's biggest players are using today to siphon billions from the stock market. “You’ll never see it on a stock chart, a company’s 13F filing, or any public data source … But this invisible “Money Link” is how I made over $1 million during one of the fastest crashes in stock market history*. And I can almost guarantee you have no idea it even exists. That changes on February 27th.” - Jeff Zananiri Seats to this one-night-only event are incredibly limited. So, don’t delay… [Click here now to reserve your spot for The Money Link Livestream]( Sponsored Overworked Clerk Makes Millions With This Trading Secret Roland was overworked, always tired, and realized the “lawyer” lifestyle wasn’t what he was put on this Earth to do. So, he opened a trading account with just $4,000. (At the time he was only making $20 bucks an hour) And in the span of a few years, he made over $1.8 Million dollars… [Click here to discover the unique trading system he used](   66 West Flagler Street STE 900 Miami, Florida 33130 United States [Click Here to Unsubscribe]( *Past performance does not indicate future results **Our gurus teach skills others have used to make money. Any results displayed are extraordinary and are not typical and will vary from person to person. 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