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Q: Can anyone trade options?
A: Yes, anyone with a brokerage account that supports option trading can trade options. However, you will have to fill out some paperwork your broker provides to qualify for option trading. While most investors will be approved to trade options, if your experience level and/or account capital is too low, you may have trouble getting qualified to trade vertical spreads specifically.
Q: How do I enter a trade?
A: Each Optium position requires two or four simultaneous options trades. Most of the time, we will "leg-in" to the iron condor by simply trading either wing first. So, you will trade either a bull put credit spread or a bear call credit spread. Most brokers will allow you to enter this spread trade all at once, so you will have 1 trade that is a buy to open order and 1 trade that is a sell to open order, they will be entered and traded simultaneously for a net credit, look for your brokers' spread trade entry screen.
If we publish the entire iron condor to be traded (all 4 legs) not all brokers will support the entry of 4 transactions at once so you may have to enter 2 separate spread orders. Of course, a single spread order executes both or all trades at the same time and is by far the easiest way to trade our credit spread recommendations.
Q: What information do I need to trade a credit spread?
A: Access to this site is all you need to open and close the credit spreads.
Q: What's the difference between a limit order and a market order?
A: Whether you prefer a single spread orders or 'legging-in' to execute the trades, you can use limit orders or market orders. Either way, you want fair prices for all positions. Consider which of the following three scenarios is best for you:
(1) With a single spread limit order, you specify the minimum net credit you want, which is the difference between the buy and sell prices. (2) With 'leg-in' limit orders, you ask the broker to buy or sell all the legs at prices you set or better; you specify the buy prices for the long options and the sell prices for the short options. (3) With a single spread market order and 'leg-in' market orders you get fair market value prices and most of the time better execution time.
Our opinion: by using limit orders you may be able to buy cheaper than market prices and sell higher than market prices. The result is limit orders often make your net credits higher as compared to market orders. The downside of the limit order is that it does not guarantee your trade will go through at your asking prices. Market orders, on the other hand, always go through (up to 20 contracts per leg), but at the mercy of market pricing, not your preferred pricing.
Q: Is it complicated to place a credit spread trade?
A: No. Just confirm that your brokerage can place the kind of trades we recommend. Both online and traditional brokerages are suitable for placing credit spread trades.
Q: How much time do I need to commit to each Optium trade?
A: It varies based on your personality and trading style. Our philosophy is to free you from the burden of watching your positions every moment. We supply credit spread trades that are low-stress, easy positions, requiring minimal attention. When the stock or index moves in an adverse direction, we may buy-to-close the short option trade(s) to limit losses and leave the long option trade open to profit in the event of the stock or index continuing in an adverse direction. We may roll the entire spread trade or we may just leave the trade to expire and suffer a controlled loss.
Stock Option Trading - Option Trading Strategies - Stock Option Trading System