Option Trading Study Group
This blog is a study group creation plan for OTA trained traders; I have a presentation plan outline for option trading, let call this session/workshop Option trading “study group”.
WHAT: Subject matter is “Options Trading” (26 skills /knowledge areas for option trading listed in here below)
WHY: Objective: Share and learn Methodologies, mindset, and Math (logic/why) of options trading (kind of brain exchange on options trading)
How: Presentation, online sessions, whiteboards, shared documents, examples, resources and trades. To manage content, we will use this blog as a common repository.
WHO: Two categories of dedicated OTA traders here:
- Producers: who will organize, plan, present, volunteer and share “lesson” plan
- Consumers: will not share (state your reason if you are consumer e.g. ‘shy’,) volunteer or participate actively but consume this resource. I welcome them
Professional trading combines traditional left-brain skills of theory, logic, math & analytical thinking with the intuitive, inductive skills of right brain thinking to find the sweet spot with the Greeks.
Mindset, methodology & math
My 8-step options trading “mindset, methodology & math”
Mindset = 8 steps to think like a CEO,
Methodology = 8 steps to construct a trade.
Math= logic, Greeks, baseline and p/L
- Remain Top of Mind
- Pich what you know best and explain to others!
- Learn Something New, teach something you know
- This is brain exchange list
- Trading Mentality (This presentation itself) mindset this topic i.e. step # 2 mindset)
- Basic options, futures and trading terms (margin, vocabulary, work flow)
- Account management: →Margin Requirements
- Equity, forex and Future Options (FOP)
- Option Underline: Option Chain analysis on TWS platform: Symbol (strikes, IV, Greeks,)
- Option Position: Option profile analysis on TWS platform: Position (P/L, graph, Probability, Return/risk RRR, BEP, Margin impact, EM scenarios)
- Expiration and Settlement” Future expiration and Option on future, assignment, FUT vs OPT expiry dates
- Expected Move:
- Theta decay (Time Decay) Greeks
- Gamma Risk (Greeks)
- Implied volatility IV (Greeks)
- Option Skew
- Buy Versus Sell
- How To Sell
- Equity Versus Futures
- Strategies (toolkit)
- Neutral Strategies (strategies toolkit)
- Direction Versus Neutral Trades (strategies toolkit)
- What Cycle to Trade
- Stop Loss (setup)
- Risk Per Trade (account management, setup, budget)
- Managing Position (set up, post trade management)
- Adjustments (set up)
- Technical Analysis (TLS aka ‘core strategy’)
- Correlations (watchlist, filtering)
- Diversification (portfolio)
- Market Conditions (macro, micro, baseline)
- What To Do After Loss (drawdown, risk, 3R (RRR) rule)
- Trading Checklist /OE
- Portfolio management and deployment
Thanks for supporting this effort. We (you and me) just want to share and grow, embrace best practices.