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I would love to continue this conversation, and learn how you guys are implementing this into a system. A long-short portfolio of straddles, for example, has a monthly average return of Seems correct to me.

Learn to Spot Option Bargains

When it is below 50, I go long. Save my name, email, and website in this browser for the next time I comment.

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A Word of Caution

Posted on May 11, by Robot James. You want to be a net buyer of the cheap stuff and a net seller of the expensive stuff. There are two ways to cut losses. One is by setting a stop loss on the underlying stock.

Undervalued stock indicators: How to find them and turn a large profit

If the stock closes below for a call option or above for a put option its stop loss, close the option position the next day. Another way to cut losses is to use the option price. That, in a nutshell, is the best way to maximize profits with short-term options. It is a system that takes profits when they are available, and cuts losses when necessary. Most important, it removes emotions from your decision-making.

The key to long-term success as an options speculator is to hit home runs. And the key to successful investing with options is to buy extremely cheap ones. Cheap options have the potential for spectacular gains. But finding those that are inexpensive and have the potential for a home run is not easy. You need tremendous patience. You may have to enter a lot of orders before you get one filled at your price.

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To get your best deal, try to buy put options on stocks that are rallying and call options on stocks that are falling. Most important, try to buy options on stocks that have the potential for surprise volatility. Stocks tend to fall much faster than they rise, so buying put options tends to be a better bet on surprise volatility.

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Undervalued stock indicators: How to find them and turn a large profit - The Economic Times

Trading Guide Historical Performance. European Futures Trading Guide. European Trading Guide Historical Performance. Currencies Forex Market Pulse. New Recommendations. News Market Pulse. Tools Tools. Van Meerten Portfolio. Contact Barchart. Site Map. Want to use this as your default charts setting?