The best time to buy stock options
Stock options can be very profitable in the stock market as long as you use them. Whenever you buy an option, you should take some time to consider why you buy it. Here are some tips to figure out when the best time to buy an option is
1. When the stock gives you a technical signal
down to the basic, you need to buy the reason for the choice to start. If you just buy the option, hope the stock suddenly has a huge move and you will be disappointed when it will not.
In addition, you also want some consistency in your trading law. If you are buying an option, stick with it and learn it before entering another form of trading
2. When you have a good risk rate of return
You do not want to take the risk of your option contract 100% rate of return. When trading options you really need to see the rate of return on risk. Most professional traders use a risk rate of 2 to 1, which means you have a risk of $ 2 per $ 1 reward.
3. When you trade with the trend
this factor adds to the right chance, so do not ignore it. Trends can last for a while, so trading with them is not a clever thing for them.
4. When it will not kill you
You just want to buy an option when you can afford the money. If you can not afford to pay the rent, if you lose, do not put it on the options trading. All the money you enter into the transaction should not be the beginning of your trading account.