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I just want to start off by saying i'm a relatively new trader at one year. I've been doing a lot day trading over the last year and things are slowly starting to make sense but i know i have a long ways to go. I'm slightly profitable. I can have a ton of wins but end up with one or two big losses that set me back.
I bought Al's regular course. He says his information applys to all markets but theres a few things i was wondering about. The type of trading i do is basically scalping stock options contracts. I have never tried forex before.
Many times Al will say buy on a bull bar closing on it's high or vice versa. Scalping stock options this doesn't seem to work all that well though. It makes sense to me for swings but not really scalps.
It's hard to buy an options contract when you're buying in the direction that the stock is currently going. For instance trying to buy a call while the stock is going up and scalping out quickly. The problem i'm finding is the options contract value is simply sky rocketing too quickly for it to be profitable.
What has been working for me is scalping trading ranges because i can buy a call as the stock is still going down to support. This allows me to get the contract very cheap, possibly the low of the day, and then if the the stock does what im expecting it to do (bounce off support and basically turn around) the option contract will start moving up in value very quickly. However if you buy the contract as the stock is already going up it just seems like its very hard to make money doing this. Swings seem to work sometimes because you can hold on to them long enough but even then i still feel like i'm paying too much. If i buy when a bull bar is closing on its high the contract is already basically overpriced and climbing quickly. Then if the stock turns around i'm instantly down a couple hundred bucks because i ended up buying such an expensive option.
I hope you guys understand what i'm trying to say. I think Al is the king and hes been so incredibly helpful to me. To me he is like the Michael Jordon of price action.
The stocks that i mainly trade are roku, tesla, moderna, nvidia..
Just wondering if anyone had any input or wondered about this themselves.
Hi, Chris. I must say I'm quite glad to find someone else who is interested in trading options, that too intraday. I am not sure how much you're aware of option greeks but I think it is bare essential knowledge and without it, you can't really hope to make money consistently.
To my understanding, you are trading naked option positions using price action, am I right?
If so, then I suggest you use covered strategies - the most basic of them. Call and Put spreads(both bull and bear, depending on the greeks context) are usually enough for directional trades and Iron Butterfly and Iron Condor work really well as non-directional strategies even in intraday(again using greeks as context).
Another problem that you appear to be having as you said here
I'm slightly profitable. I can have a ton of wins but end up with one or two big losses that set me back.
It means that you are currently struggling a bit with your trading plan. You have to find a way to manage your losses otherwise, it would become incredibly hard for you to stay profitable.
It's hard to buy an options contract when you're buying in the direction that the stock is currently going. For instance trying to buy a call while the stock is going up and scalping out quickly. The problem i'm finding is the options contract value is simply sky rocketing too quickly for it to be profitable.
Again, greeks would help you out here. I am guessing that the options you are entering after a breakout already have a high gamma and vega. Also with the breakout, I imagine the IVs would start climbing too. So, when you an option with high gamma, high delta and the stock having overall high IV, you have all 4 factors working against you - you always have theta decay as an option buyer, you risk high delta going against you if the stock pulls back after a breakout, high vega will work against you as the IV climbed up and the gamma works against you as well since you are scalping.
I suggest you read a fundamentally strong book on options mechanism to take out these challenges you are facing. Hopefully, you will find your answers then. I cannot really discuss the problem in deeper complexities without knowing the details of what you are doing but these seem to the problems you are having.
It is also why you are finding trading ranges more profitable than trends.
Hope that helps. Do come back if you still face more issues and I would be happy to discuss on it more. I did not find anyone on BTC forum who are interested in trading options, so speaking with you regarding that would be a nice change and would also work in reviewing my own concepts.
