Non directional option trading strategies. Let us show you an example of NON-Directional trading strategy using Nifty Options. A Non- Directional trading strategy in derivative markets primarily means that we are neither bullish nor bearish about markets. This doesn't mean that stock markets are non-directional. Markets will always move, but the.

Non directional option trading strategies

How to Trade Options: Non-Directional Strategies

Non directional option trading strategies. Directional Trades. You're probably already aware of – and use – the basic strategy of directional trading. You buy a call if you think a stock is going up, or you buy a put if you think a stock is going down. For the directional trade to work, you have to know details about the stock, like when earnings are.

Non directional option trading strategies


SteadyOptions has your solution. Directional and non-directional are two variations of trading strategy. Non-directional trading strategy is the best option for traders who do not want to bet on the direction of the markets or individual stocks.

The following infographic explains what is a non-directional trading, and gives some examples of non-directional trading strategies. One of the most common criticisms of any kind of investing is that it can be viewed as being akin to gambling. By Kim, 19 hours ago. One of the interesting features about options is that there is a relationship between calls, puts, and the underlying stock. By MarkWolfinger, Saturday at The trade has a limited risk which is the debit paid for the trade and unlimited profit potential.

By Kim, November By Ophir Gottlieb, November Netflix has earnings due out Monday, October 16th, after the market closes. Seven calendar days before then would be By Ophir Gottlieb, October 8. The question is this: By MarkWolfinger, October 5. Microsoft has earnings due out on October 26th, , after the market close, according to Wall Street Horizon. By Ophir Gottlieb, October 1.

Options Greeks measure the different factors that affect the price of an option contract. Unfortunately, many traders do not know how to read the Greeks when trading. The following infographic provided a brief explanation of the most important Greeks: By Kim, September I understand why an options trader might prefer using a non-directional trading strategy rather than, as you phrase it, "bet on the direction of the markets or individual stocks". These non-directional trading strategies certainly minimize your loss potential, but at the same time limit your profit potential.

There's a hugh difference in the two approaches. That's the hardest game to win. Nobody is that good at figuring out the where and when of a market move. But, if you are somewhat good at having at least a general idea of which way the market is headed either higher or lower , you can also make a pretty good guess as to where the market probably won't end up at option expiration.

When you sell options, your only concern is for the market to not go pass the OTM option strike that you are short. And when you have a general idea where the market probably won't end up at option expiration There are many ways to trade options. Directional strategies might work for some people. It is true that non-directional strategies usually limit your profit potential.

But with directional strategies, profit potential is unlimited only in theory. It also impacts your position sizing. Also, don't forget that there are many types of non-directional strategies. Some strategies bet that the underlying will not move much.

Others like straddles need it to move - just doesn't matter which direction. The bottom line is that everyone should find what works for him and stick to it. There is no holly grail, only hard work and discipline. Your statements about non-directional strategies are well taken. I completely agree with you that everyone should find what works best for them and stick to it. For me directional strategies have proven to be very profitable.

Thanks again for your feedback. I definitely cannot compete with those results. On the other hand, my results are fully documented. I still have to see directional strategy consistently producing similar results or even half of it. I mean, not some absurd claims, but fully documented track record, with portfolio allocation etc. I'm certainly not the world's best trader, but at the same time I'm not making an absurd claim. Lets see your directional trading results in real time.

Kim is willing to discuss and share any new approach or idea in options trading. However, there is a "small" problem: And the only way to calculate gains is return on margin. Unfortunately, internet is full of hype from people that will tell you what you want to hear. In some cases it is ignorance, in others it is intentional misleading.

Be very careful when someone makes absurd claims. Usually when you dig deeper, you find out the "fine print". What you characterize as intentionally misleading was really a misunderstanding.

There are many recognized options trading experts that promote selling naked puts as a fabulous way to collect option premiums, which generates income for you while you wait to potentially purchase your stock at a lower level. How great is that? Someone will actually give you cash today in exchange for the opportunity to buy a stock at a lower price. You can see it as sort of a consolation prize given to you for your patience as you wait for your stock to get cheaper. Naked put selling is a time-tested, legitimate, and popular strategy.

You only want to sell naked put options on stocks you want to own. But since you are selling OTM put options on these stocks, it's unlikely you will be assigned the shares. Thus, the option contract expires worthless and you keep the full premium. So directional trading, like naked put selling, can be very profitable… potentially more so than non-directional. Kim, even by your own admission in an earlier post in this string you stated: Is selling puts good strategy? It's not a holy grail you profit less if the stock goes up a lot , but it's a great way to buy stocks at discount.

However, I find it ironic that you advocate this strategy as superior to non directional trading while mentioning that non directional trading limits gains. Isn't put selling limiting gains as well? With naked puts selling, this is not the case. As a side note, your claim "But since you are selling OTM put options on these stocks, it's unlikely you will be assigned the shares. If you go further OTM, you will have higher probability of success, but also lower potential gain since you will get less credit.

Frankly, it doesn't really matter. Nobody should make such absurd claims. It is very misleading, and it doesn't matter if the reason is ignorance or intentional misleading. Some hedge funds went out of business after doing it. Doesn't mean it's a bad strategy - on the contrary. But describing it as a holly grail that cannot lose money is very inaccurate and misleading.

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By Kim February 17 non-directional strategies infographic Directional and non-directional are two variations of trading strategy.

Options Equivalent Positions One of the interesting features about options is that there is a relationship between calls, puts, and the underlying stock. Options Greeks Explained Options Greeks measure the different factors that affect the price of an option contract. Go to articles Blog. Share this comment Link to comment Share on other sites. Have a good day! You missed my point. Your content will need to be approved by a moderator.

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