The key is likely to first develop a trading plan for your spread positions in conjunction with the tools on PowerOptions. A trading plan may consist of:
- What are my goals for monthly or annual income?
- What exposure am I willing to risk in the market?
- Should I look for lower probability trades with a higher return, or higher probability trades with a lower return and higher risk vs. reward ratio?
- What is most important in your trade selection:
- The underlying security?
- Minimum option premium?
- % Return or % Annualized Return?
- % Probability?
- Difference in strike prices (risk on the trade)
- Time frame for an open position (weeklies vs. standard expiration).
- Detailed Exit Strategy, including what is an acceptable loss vs. management techniques in various situations.
This may sound like a lot to cover but once you map out a trading plan the pieces will fit together regarding:
- What criteria are most important to use in the PowerOptions search tools.
- What steps will you use to research and analyze the position more effectively.
- What alerts to set in the Profit and Loss Portfolio tool as you track your spread positions.
- What to look for when adjusting, rolling or closing a spread position.
The PowerOptions’ staff is available every trading day during trading hours by email and toll-free phone lines to help you get your trading plan together and get you setup with the PowerOptions tools to make your investing plan easy to implement.