New To Options Trading? Here’s How Not To Make A Fool Of Yourself
Anytime nonprofessional investors are part of a major investment trend, Wall Street’s commentariat warns that surging stock prices will soon fall from grace faster than Jerry Falwell Jr. But what really annoys them are the masses horning in on the action. Sneering at the newly minted Robinhood and Reddit hordes trading options on stocks like Apple (ticker: AAPL), Peloton Interactive (PTON), and Microsoft (MSFT) doesn’t do anyone any good. I prefer to share some tips on how best to play the game. Consider this an options trader’s primer aimed at helping the increasing number of investors who are learning one of Wall Street’s greatest secrets: Options can help you better navigate the stock market. • Have an investment thesis. Know why you are doing what you are about to do. Focus on events like earnings reports or product launches and try to figure out how the underlying stock might react. • Use your opinion on the stock to decide whether you will buy or sell a call or put option. Don’