Trading using cash future option day
Sometimes the effects of current stock movement on the one hand, and of the expectations of future stock movement on the other hand, both act to push option prices in the same direction. But sometimes they act in opposition. Finally, there is the issue of time decay. This puts steady pressure on option prices both puts and calls , while not affecting the underlying stock at all. So, even the best analysis of probable stock price movement alone does not give us enough information to trade options effectively, most especially over very short time frames.
We also need to assess market expectations. Are those expectations too high, making options overpriced and therefore a good bet to sell short?
Or too low, making the options an especially good buy? Answering these questions is not especially difficult, and we have great tools to do just that.
However, the effects take longer to play out than a few minutes or hours. We can make the three option forces into three separate profit centers when we use them correctly, as taught in our Professional Option Trader class. Use the right tools for day trading, and use the finely-tuned instrument of options in the environment where they can really sing.
Options November 10, Day Trade Options? Disclaimer This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever.
Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. To facilitate this, CFS facility shall be available for trading across 3 contract months at any time, corresponding to the current, near and far monthly futures instruments on that underlying asset.
A trader shall be able to enter orders as one single order. Availability for trading — Orders shall be allowed only if instruments of both Equity and Derivatives segments are available for trading. Market Segment availability — Orders shall not be allowed in case either of Equity or Derivatives segments is closed. Orders shall not be allowed in the pre-open session 9: Instrument suspension — Orders shall not be allowed if the instruments in either of Equity or Derivatives segment are suspended for trading.
Member suspension — Orders shall not be allowed for a member if that member is suspended in either of the segments — Equity or Derivatives segment. Moreover, in case of any open positions in either of Equity or Derivatives segment instruments, the member shall be able to square up those open positions individually in those instruments. Execution of 2 orders shall follow the existing price-time priority logic. On execution of a trade, this trade shall then be split into two more trades — one trade on the equity segment instrument and the other trade on futures instrument, both belonging to the same underlying stock asset.