How to Choose the Best Options Alert Trading Service
When a new trader enters the mystical realm of options trading, it can be super overwhelming due to the sheer volume of information and the tech required to correctly identify successful trades. Although the fundamentals remain the same as trading regular stocks, options come with the additional variation of dates of expiration to select from, which can quickly lead to a decision overload.
Although we firmly believe anyone is able to trade options with proper education and support, having a base of understanding about how options work is crucial to trading your account, and maximizing your return on investment.
And because of the newfound popularity of options, there’s a lot more research and understanding that’s needed to make a profit from trading. One of the best ways to start option trading is to team with an industry-respected professional.
Utilizing a reliable newsletter or options trading service (like the one found at The Empirical Collective) is an excellent start towards options trading.
The primary benefit of picking up a membership to an options trading service is that you’ll get immediate trading entry and exit guidelines. The trade advice will contain all the information needed to enter a trade along with the selected deadline date, strike rate and the maximum price for entry. When you let experts take care of the job for you, you will gain a wealth of knowledge by watching and executing the trades on your own.
Of course, you never want to just blindly follow their trade alerts – even if they are the best options alert service – but rather, take note of why they’re trading it, and then go from there. You could even paper trade their alerts as you get started. And you may want to look into learning some technical analysis as well.
What to look for when signing up to an Options Newsletter
There are a few main things to consider when looking into finding one of the best options alert services, so that you do not invest your hard-earned cash with a company who doesn’t have your best interests in mind. Because – unfortunately – some options newsletters do not provide trustworthy and relevant information.
So make sure you choose the right options newsletter by looking for these traits:
- Strategies that have been proven to work : You are likely to see newsletters on options that make outrageous claims or claims that they’ve discovered the “million-dollar formula” to trading. While it’s a good idea to approach big claims with some skepticism, keep in mind that it IS possible to generate results that are as impressive as they appear because of the leverage that’s available when trading options.
- Real-time trade alerts: The volatility of the market cannot be overemphasized. One minute, your whole trading portfolio could be in green. Within two minutes you could see 90% of your portfolio may dip into the red because of large price fluctuations. Don’t accept advice that doesn’t have realtime SMS or email alerts. If a newsletter’s publisher delays their advice on trading, it makes their alerts less helpful, as the timing is crucial in short-term options trading.
- Confirm support for trading: While newsletter publishers aren’t allowed to offer specific advice for trading, a trustworthy newsletter company will do their best to assist their customers. Contact the company you’re thinking of using and check how long it takes you to get a response & an answer to your inquiries. This is often a great indicator of how good the support will be in the future.
Regardless of the service you end up choosing, make sure that you’re only trading with money that you can afford to lose. Always use proper money management, and never trade with positions that are just too large for your account.
Frequently Asked Questions
What are stock options?
A stock option is a contract that gives the holder the right, but not the obligation, to buy or sell a certain number of shares of stock at a set price within a certain period of time.
The holder of a stock option can choose to either buy or sell the shares at the set price. If they choose to buy, they will pay the set price minus the option price (the “premium”). If they choose to sell, they will receive the set price minus the option price.
Options are usually bought from and sold to other investors on an exchange. When you buy an options contract, you are buying it from another investor and when you sell an options contract, you are selling it to another investor.
Is it better to trade stocks or options?
There is no one-size-fits-all answer to this question. It depends on a variety of factors, including your financial situation, investment goals, and risk tolerance.
That said, options can be a more risky investment than stocks, so they may not be appropriate for everyone. And if you’re not familiar with the basics of options trading, it’s important to do your research before getting started.
Do you have to buy 100 shares of stock with options?
Yes, if you’re trading American-style options, you’ll need to buy at least 100 shares of the underlying stock. This is because American-style options can be exercised at any time before they expire, while European-style options can only be exercised on the expiration date itself. So if you owned an American-style option and wanted to exercise it, you would need to have the necessary shares of stock available in order to do so.
How much money do you need to buy options?
While there is no specific amount that you must have, we recommend you have at least $5,000 to buy options. That’s because each option contract represents the right to buy or sell 100 shares of the underlying security. And as with most investments, the more money you have to work with, the more contracts you can buy, and the greater your potential profits (or losses).
Keep in mind that buying options is a high-risk investment strategy, so it’s important to only risk money you can afford to lose. Options can be extremely volatile and may not be suitable for all investors.