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Wednesday, September 27, 2006

My Trading Style (Part 2)

Part 1

As I have said before, I like to keep my trading simple (hence I named after this blog Simply Options Trading!). I buy call options and put options. I don't participate in strategies like spreads, combination spreads (butterfly, iron condor etc)or synthetic positions. Occasionally, I buy straddles, & very rarely strangles. Early on in my trading, I've tried my hand in trading spreads. Though with some success, I realised its not my cup of tea. While spreads are deemed to be more conservative approach (limited risk, limited gains), I guess I don't have the patience to wait a month for it to expire worthless to know that the money is safely in my pocket. But I don't entirely rule out revisting spreads in future though. For a start, I strongly encourage newbies to paper trade different strategies to see which suits them best.

I do swing trades & intraday trades. I don't like to hold my positions for more than a week & over the weekends because I want to minimize my exposure in this increasingly volatile world.

Most of the time I buy in-the-money options to reduce time decay effect & for greater price movement of the option. And I go with current month options, unless they are close to expiration, then I'll go to the next month.

To be continued...

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