Going into 2019 now, how are you approaching the market? If you haven’t yet looked at options trading, I implore you to give it a shot. If you’re thinking it’s not for you, trust me, I used to think the same thing. I looked at it briefly, thought it a little complicated and just not for my buy and hold taste. Yet I learned stock options, and now I like to use them.
They make for great trade ideas, and they can accentuate your other trades. Think about how you could pick up premiums by writing covered calls on stocks you own. Some of those stocks could go up beyond the target price, yes, but making a habit of writing covered calls when the premiums are good will likely turn out quite well.
To buy and sell options, you need a good understanding of the options market. The first options contract I sold was a covered call, and honestly, I didn’t quite understand everything at the time. That was years ago. Later on, when I understood options a little more, I sold a put without understanding the market completely.
You see, I have a habit of jumping in the deep end, but you have to take risks. Your trade ideas, however, need to be measured to a degree, and you need to know what you’re doing. Understanding the risk is key, and there is risk involved with every trade you make. Options can indeed be riskier, but sometimes they can really help you rake in the returns.
The more you understand what you’re doing with options, the more confident you’re going to be about what moves you make. I can tell you that for sure. So that is what I think you should do for 2019 if I can make one suggestion, study options. If you can pair them with your holdings, they make great trades as you move through earnings each quarter.
Let’s say that you’re a buy and hold investor. That doesn’t mean you can’t make options trades. You can indeed, and I think you will enjoy the options market. It doesn’t seem so complex once you learn more about it, at least that’s how I feel. And I definitely thought it was complex when I first approached it to be sure. And there’s always more to learn, too, because there are a ton of options strategies out there.