QQQ Trading System

Long options trading, buying calls and puts and selling them later, is a brutal zero-sum game. The only way you can win is if whoever sold you the options loses, and vice versa. No new wealth is created, capital just changes hands among speculators and hedgers.

Neither tastyworks nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. The strike price is the contractual price at which we will gain the right to sell because we are looking at puts our underlying asset, QQQ stock, until our options expire.

Terry's Tips Stock Options Trading Blog

A trading strategy on Collective2. Follow it in your broker account, or use a free simulated trading account. Advanced users may want to use this information to adjust their AutoTrade scaling, or merely to understand the magnitudes of the nearby chart.

I like sticking with the QQQQ and its options because of the large volume traded very liquid I currently maintain a Blog to explain my Trading System and Comment on my daily trading: I also add new techniques, tools, and strategies on a monthly basis so that we are ever growing and learning. You will have access to the details of my Trading System You may also follow my "real-time" Signals on Twitter when I am active at http: I do not track commission because it varies so much between traders' accounts.

So, you can deduct your own typical commission from these results. Rate of Return I have definitely concluded that trying to keep a Delta Neutral position throughout an OE period is very time consuming, a hassle, and can easily lead to losses..

I have discovered that for the most part it is much better just doing my individual, directional Trades and Banking Profits more often. So, I will be going back to that method for my Options Trading and will go back to posting here in real-time for all trades using my Trading System Models at http: Old Past Performance also shown here: You are Guest on WEB7.

Free - Posts Today: I do mostly Day- and Short-Term- Trading. It looks like this page isnt used much. These side bets are the QQQ options. Trading the QQQ options is not for everyone, as fortunes are made and lost daily, but they are perfect for speculators who can fully understand and handle the immense risks.

QQQ options grant the speculator the right, but not the obligation, to buy or sell the QQQ shares themselves at a certain price for a certain period of time. QQQ call options grant speculators the right, but not the obligation, to buy the QQQs at a certain price for a certain period of time in the future.

Now you may be thinking that this all sounds quite complicated. If you really did have to exercise your QQQ options to buy or sell actual QQQ stock they would indeed be a pain, but in the modern world of options speculation you never have to exercise any options ever. You can directly buy or sell the actual QQQ options contracts themselves anytime for cash. QQQ options are completely self-contained, independent, fully-tradable securities in their own right.

All you have to know is a few pieces of information and you can buy or sell the QQQ options within your normal online trading account after it has been option-enabled. The screenshots below are of actual QQQ options quotes from the outstanding Yahoo Finance website located at http: Welcome to the world of options!

Most online trading accounts allow you to simply trade options based on a few easy-to-understand attributes rather than their formal symbols. These quotes are from QQQ options that expire in January Stock options expire on the third Friday in their contract month.

At expiration options become worthless, the contract no longer exists. Next you need to decide if you believe the QQQs are heading higher or lower. If you think they are going up, you should consider buying call options. If you think they will fall, you should consider buying put options.

We will assume the markets are heading down for this example, so we will look at the puts above. Now that we have decided to consider puts expiring in January, we need to make a decision on which strike price to trade. The strike price is the contractual price at which we will gain the right to sell because we are looking at puts our underlying asset, QQQ stock, until our options expire. Of course most speculators who buy puts never have any underlying stock to sell, as the whole speculation world exists exclusively in options.

Please make sure you understand the following logic, as it is foundational for options speculation. When looking at any financial-market quotes, the bid and ask are always from the perspective of the dealer who sells the financial securities to you. Our speculator buys puts, the QQQs fall, his puts soar in value, and he sells them. He buys low at his bid and sells high at his ask, earning a small profit on every transaction.

The actual options bids and asks at any moment in time are determined by a combination of free-market supply and demand and a mathematically-complex options pricing model. Options prices have two components, intrinsic value and time value. When a speculator buys an options contract, another party has to sell it to him. Obviously there is not a lot of risk the market will move against the seller if the expiration is tomorrow, but if it is 8 weeks from today a lot could happen in this crazy world of ours.

Time value starts off high on an options contract and steadily decays towards zero as expiration draws nearer. While we discussed a put option above, a bet the QQQs will fall, the same underlying logic applies to a call option, a bet the QQQs will rise, but the in-the-money and the out-of-the-money scenarios are of course reversed. So if you have an idea for a potential trade, it is easy to find a specific QQQ options contract that will suit your needs. Most online brokers will let you trade options if you sign a form in blood that says you fully understand and accept the large risks involved.

My personal favorite online broker by far used to be Datek , which was unfortunately just swallowed up by Ameritrade. There is one more options contract idiosyncrasy you need to know about. To find out what a single share options contract is worth, you just take the quoted price times You can buy or sell as many share contracts at a time as you want, from one to thousands.

Commissions for options trading are quite inexpensive today. See why options speculation is so seductive? Of course an options speculator can lose money just as fast or faster than he can earn it if he makes the wrong bet. In this essay I am only talking about long options, buying calls and puts from others and selling them back later. Option sellers have more opportunities to profit than option buyers.

Keep in mind that time erosion is an option seller's ally. As a general rule, option sellers may profit:. Based on actual trades autotraded by major brokers Based on premium received for selling options short. Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.

Uncovered Options Trading System.