By: Steve Smith
As investors await earnings from the likes of “Microsoft (MSFT)” and Twitter (TWTR),” new traders are chomping on the Robinhood platform to get a piece of the action. I’m going to be playing TWTR using an options strategy called a double diagonal in my Options360 Service but this may be too complicated for newcomers going it alone. My advice is to get some options trading education, which is widely available all over the world wide web.
Ideally, no single position should represent more than 5% of a portfolio. My personal options account typically carries six to 10 positions at a time. These can run from complex, multi-strike hedged positions that have four to six months until expiration, to speculative plays based on unusual activity or an upcoming event that will be held for just a few days. Why? Because again, I never want to get knocked out of the game on one trade or allow a position to get so large that it could threaten gains elsewhere in the portfolio if things go south. When people go broke trading options, it’s usually because they not only swung for the fences but put far too much money into that single trade.
To learn more about Steve Smith’s unique trading approach, and access to his highly-acclaimed Options360 course, click here.
Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.