Successful Options Trading Stategy

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Close – Successful Options Trading Strategy

Successful options trading requires a strategy. What are the components of a successful options trading strategy? The Yen appears to be in trouble after the Bank of Japan Governor, Masaaki Shirakawa, spoke in a Wall Street Journal interview about disruptions in Japanese industrial production. Developing a successful options trading strategy for the Yen will require traders to keep up with developments on the ground in Japan and market reaction throughout the Forex trading world. The threat of another full civil war looms in Syria as society rises en masse to protest generations of repression. The serious currency trader will not be interested in trading the Syrian pound but in trading British Pounds, Swiss francs, and Euros as another society threatens to descend into chaos on Europe’s flank. A successful options trading strategy for the European currencies will take into account possible disruptions in oil supplies from violence in the Middle East, disruption in shipping if chaos spreads, and the cost of potential military intervention such as in Libya. How to trade options successfully in this evolving situation is, as always, to keep up with the news, read market sentiment with continual technical analysis, and dig deeper for the facts of the matter that will drive the situation to its eventual conclusion.

A successful options trading strategy in this chaotic world will typically be based on technical analysis of pricing and the use of short term trading. Options trading of foreign currencies is what first comes to mind for a successful options trading strategy related to international events. However, oil prices will be affected by any continuing or escalating violence in the Middle East. Disruption of markets across this vital area will affect manufacturing from Asia to Europe to North America. Gold prices may well be driven even higher as investors in threatened nations seek safe havens for their wealth. For the beginner learning how to buy options on oil will be useful in trading options on oil futures as well as oil stocks.

As always a successful options strategy on trading anything is based upon a clear analysis of the situation, development of an easily executable trading plan, commitment of sufficient time and effort to trade successfully, and a frequent review of options trading results in order to adjust a trading strategy accordingly. For the options trader the volatile markets of today in Forex, stocks, commodities, and futures are potentially very profitable. An ever-present risk in such markets is to get caught up in market psychology as a result of continually negative news reports. A successful options trading strategy will help the trader maintain an unbiased and objective view of world and national events. From an objective viewpoint the trader will be able to anticipate the inefficiencies of the markets that psychological reaction produces. While the trader is studying up on how to buy options on gold, oil, agricultural commodities, or Japanese companies a successful options trading strategy can lead to handsome profits in fear driven and reactive markets across the world.


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