7 Practices of Successful Options Speculators

By Paul Mladjenovic

Part of High-Level Investing For Dummies Cheat Sheet

Option strategies augment any high-level investor’s or speculator’s overall approach. If you do option strategies of any kind, the following practices will help you get ahead:

  • Discipline: Successful options speculators make sure they aren’t susceptible to emotions such as fear or greed, and they try to avoid a bias.

  • Money allocation: They speculate only with money allocated for options —and they don’t spend a penny more.

  • Patience for opportunities: They don’t trade every day. They wait for the right trades.

  • Planning: They have plans for entering and exiting a trade.

  • Ongoing education: They don’t assume they’ve learned all they need to know about options and the underlying assets.

  • Hedging: They aren’t totally directional. They know that the market can sometimes go against them.

  • Back testing: They use data from past or historical trades to see how trades would have or could have resulted.