When to Trade Options as a Day Trader
I’ll go on the record and say I am always a stock-first kind of guy when it comes to day trading.
And the reason is pretty simple…
It comes down to price.
Options pricing has a hundred different factors that go into it that make its price not reflect the current price of the stock.
But that’s the nature of options. Options contracts are “bets” that a stock will hit a certain price by a certain date.
So, if a stock, for instance, ripped 50% in one day, plunged 30% the next day, and then ripped higher another 40% the day after that…
The options for both the calls and the puts could be incredibly high because no one has a clue what’s actually going to happen.
This isn’t to say that I don’t trade options at all though.
On the contrary, there are plenty of times I’ll dip my toes into some options plays.
But they have to fit my criteria if I’m going to do it…
I’m not going to bog you down with the fine art of knowing whether or not an option is priced too high. That gets way too deep into the nitty gritty.
Instead, I want you to follow these simple rules if you’re going to day-trade options…
1. Don’t Trade Options in the First 15 Minutes of the Day
2. Trade Options on Thursdays and Fridays
Seems simple enough right?
Oddly enough, it can be that simple as long as you know what you’re doing.
Especially if you’re starting off anew, I highly recommend you follow these rules.
I teach rules like these and I walk my own followers through new trades in The Warlock’s World.
So if you ever feel lost trading around the VWAP,I highly recommend that you join us today.
When it comes to the first fifteen minutes of the day, you are unlikely to get a good value on the options that you buy.
On top of that, you absolutely need to be fast if you’re trading the opening bell.
That means looking at the stock and options trade at the same time, having your finger on the buy and sell button, and having a good platform that allows you to get in and get out in a split second.
The market tends to whip back and forth before it makes up its mind in the morning, and adding options to this just increases the volatility of your positions.
Usually, my goal for the day is to make my cash in stocks in the first hour of the day. Then once I have my day’s pay, I start scouring the market for potential options plays and use the money I earned to fund those trades.
I won’t ruin my day with these plays, but I use just some of that money to test the waters and see what’s out there.
The second thing I mentioned is that you should look to trade options on Thursdays and Fridays.
This has everything to do with the expiration of options trades.
So, the closer an option gets to the said expiration date, the cheaper it will become to play it at the money. The fewer days between expiration and the current date makes for less of a chance that the stock will rip higher or lower.
IF you wanted to trade the open of the markets with options, Friday mornings may be your best bet to do so. Know that it’s still risky, but can be done if you’re already experienced with trading options around the VWAP.
That’s also why we love trading earnings on Fridays. The at-the-money weekly options are always cheaper on Fridays than they would be on Mondays. That’s because there’s only one trading day to account for instead of five.
Remember, rules are good and fine. But application and execution is where you learn how to do trades like these with options.
I highly recommend you join us in The Warlock’s Worldwhere every day the market is open, there’s a new trade to be had. Our members are making money, every day, so take the first step and join us today.
As always, if you have questions or comments, feel free to email me at KennyGlick@MoneyMapPress.com.
I’ll see you all tomorrow morning.
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March 02 2023
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