1. Judging the market direction
Whether the judgment of the market direction is accurate or not has a vital impact on the success or failure of the transaction.
Many of the subject matter of option trading are futures contracts or spot directly related to futures, so the method of judging market direction in option trading is basically the same as that in futures analysis, mainly from macro, fundamentals, technical aspects, market structure, trading psychology and so on. ?
2. Judge the market speed
Judging the market speed is a very important link in option speculation, especially for the buyer of options, which is even the most important key to profit and loss to some extent.
For the seller of options, as long as the market direction is judged to be correct, they can make a profit; However, for the buyer of options, it is time-consuming to pay royalties. If you underestimate the speed of the market, even if the market is in the right direction, it may cause huge losses. ?
3. Decide to choose a strategy
After analyzing the market trend and market development speed, investors can adopt corresponding option speculation strategies according to different market expectations.
When the market continues to consolidate, sell both call options and put options.
4. Choose a performance price
Even if investors have a good idea of the direction and speed and choose the right option strategy, if they don't choose the right exercise price, they may also lead to losses or little profits.
Take the option of buying 50ETF as an example;
From the above table, we can find some problems when choosing different execution prices:
Generally speaking, once you make a profit, the deeper the virtual value, the higher the return ratio will be; Even if the market rises as expected, it may lose money if the execution price is wrong. Therefore, investors should pay attention to the following points when choosing the exercise price of options:
(1) Before choosing the exercise price, analyze and forecast the target price and calculate the breakeven point of the option. ?
② For option buyers, if the market is expected to break out, in order to get better returns, they can try to choose virtual options.
③ The exercise price of the selected virtual option should not be too close to the predicted price point, and the appropriate exercise price should be selected according to the requirements of your winning rate and return rate.
5. Select performance period or contract.
Choosing a suitable performance period or contract mainly needs to consider the following two factors.
① Mainly consider the liquidity of option contracts. Not only that, but also consider whether the liquidity is enough when choosing the execution price, so as to open and close the position smoothly.
(2) the size of the premium. The longer the performance period, the greater the premium, but the slower the time value declines.
6. Determine the capital position
The rights and obligations of options buyers and sellers are different from the characteristics of risk and return, and the fund management strategies are also different. ?
The biggest loss of the option buyer is certain, that is, the premium paid. Option buyers usually have a misunderstanding that they will buy a lot of options when the maximum loss is determined and the premium is relatively low.
However, the buyer of the option should pay special attention to the fact that the probability of the buyer's winning is very low, especially the buyer's winning rate of the hypothetical option will be very low, which is likely to lose all the royalties. Therefore, the fund position of the option buyer must be within the amount of losses that he can tolerate.
For futures options, generally speaking, an option contract corresponds to a futures contract, and the maximum income of the option seller is certain. However, selling options contracts has unlimited risks as futures contracts, so we can refer to the management methods of futures capital positions under the same circumstances, or be a little more active than futures, and never oversell options because of the impulse to charge more royalties.
7. Determine the evacuation strategy
When many investors are option buyers, they may think that the option buyers have paid the option premium, and the maximum loss has been locked, so there is no need to make a stop loss strategy. This is actually a misunderstanding.
First of all, we should understand the market conditions under which option buyers will have better trading results. Being an option buyer is an option strategy we adopt when we expect the market to fluctuate rapidly or unilaterally. If the market trend changes and does not meet the entry conditions of option buyers, they should stop loss or take profit, rather than let the royalties be eroded.
There are many similarities between the stop loss method of option sellers and futures, and they can also use technical stop loss, capital stop loss and time stop loss.
However, the profit exit strategy may be different, because the maximum profit of the option seller has been determined. If the market is favorable, the seller's profit has reached 70%, 80% or even 90% of the usage fee charged. At this time, we don't have to earn all the royalties back, so we can leave early, because we don't need to take big risks for the remaining small interests.