Option trading is a very challenging task. If one wants to master writing about option trading, they have to understand how change in price of the underlying affects the premium of an option.
An option writing course is an online course that teaches one how to write about option trading.
To be a master at option writing, one needs to follow certain tips that are discussed below:
-Trading stocks with options can be riskier than trading single stock because there is the possibility of unlimited loss. Therefore, the writer should write about all aspects of volatility and average true range (ATR). In addition, he or she should write about the trends and significance of bands.
Writers should think like fundamentalists who believe that stock prices reflect all known information and chartists who believe that charts contain hidden patterns. They must make it clear which school of thought they follow. For example, suppose the writer is a fundamentalist. In that case, he or she should write that options are similar to other derivatives and the price of an option changes as the underlying stock changes its price.
The writer must make the readers aware of different trading strategies such as covered call writing, iron condors, and bull put spreads by comparing those with traditional strategies like buying a share of stock. In addition, he or she should mention various measures used in technical analysis, including moving averages and volatility index (VIX).
-The article must include all types of options contracts such as puts and calls with American, Indian and even exotic options. A writer should also explain the short-selling of stocks along with writing covered calls.
-He must explore various technical indicators like moving averages of X period and exponential moving average (EMA) of Y period. A writer should also explore multiple volatility term structure models that are helpful in predicting future volatility based on past volatility.
-Writer must include a risk-reward ratio in his writing when they are comparing option strategies with traditional strategies. He or she should mention all possible outcomes when a trader uses options such as loss limited to the premium paid for the option, unlimited upside gain and large downside loss in addition to small gains and losses when compared to buying stocks.
-The writer must compare trading in individual stock with buying exchange-traded funds (ETFs).
While writing about delta, gamma and rho, the writer must clarify how the price of a call or a put changes with a change in the underlying asset’s price.
-When a writer has mentioned various positions that traders take, he or she must discuss Greeks such as vega, lambda and rho etc.
-Writer should mention different writing options strategies such as covered call writing and bull put spread along with mentioning distinction between long term options and short term options.
-The writer must include charts in their article to explain to readers how option premium is affected by factors such as time decay, stop loss, stop gain parameters etc. They should also write about how to generate trading ideas from graphs.
-The writer should write about the different options while the advantage of each type of contract, i.e. how Indian style options are advantageous over American style options because of the possibility of early exercise.
-The writer should write about all aspects of stock options trading, including taxes, success rate etc. In addition, they must make it clear whether the article is for beginners or experienced traders.
-Writer should highlight various factors that affect an option’s premium, such as volatility and time decay, while mentioning Greeks such as vega, gamma and delta etc. The writer must also discuss the curvature of Greeks and break even points at the expiration date to keep readers engaged in reading the article until its end.
-If one is writing for beginners, then they must talk about different types of options such as calls and puts besides differences between Indian and American style contracts. One would also like to mention that options trading is riskier than buying stocks hence the trader should only trade if they have funds that can be lost completely in case of a loss.
-If the writer is writing for experienced traders, then he or she must put forward all the possible strategies by which investors buy and sell options along with the advantages and disadvantages of each strategy. He or she may also rely on graphs and charts to explain concepts such as gamma and vega etc.
-Write about the factors that affect premium such as strike price, underlying stock’s price, time till expiration etc.
Option trading courses are gaining popularity among novice as well as professional traders because of various advantages they offer, such as immense learning opportunities and lower risks than traditional trading. In addition, these courses guide participants about how to write different kinds of options and help them enhance their skills so that they can generate better trading ideas.