What Are My Options?

I realized several months ago that I really don't like trading options. Yes, they are great leverage. Instead of buying a $100 stock, you could buy maybe a $10 call option instead. Now you can afford to buy more options (1 option contract controls 100 shares). But unfortunately there is so much more that affects the pricing of an option then just the price movement of the stock. Such as volatility, delta, time decay, and so on. So there have been times when my stock moves in my direction, but I still end up losing money! That's why I don't care to trade them anymore. I've been focusing on trading stocks to fine tune my entries and exits without worrying about those hidden influences.

With this in mind, you can imagine Andy's surprise when I bought a put option today. Since I'm trading our IRA account, I'm not permitted to short stocks. That ties my hands a little. Especially in this bear market. Another good way to trade bearish opportunities in an IRA is to trade the inverse Index ETFs, such as the Short Qs (PSQ) or the Ultrashort Qs (QID). Each Index has an inverse ETF - which goes up when the Index goes down. Unfortunately I didn't get in on this recent drop of 12.5% (on the SPX)...I guess I was thinking more bullish than the rest of the market and I kept waiting for the next bounce. Ha! One thing I've learned is that "you have to trade what you see, not what you think." Perhaps I should listen more to all of this great advice!