@Terra_Incognita , an experienced trader on Tiger Brokers, did another online session on options trading.He shared his trading experience, introduced four beginner-friendly strategies, analyzed the current market situation, and provided guidance on contract selection, position sizing, and exit plans. The session also emphasized the importance of risk management, consistent trading, and continuous learning.
Speaker Introduction
Background and Experience: Terra, formerly a semiconductor professional, has pivoted to full-time trading since 2023. He has extensive experience in trading various financial instruments, including stocks, commodities, and futures, and has achieved significant success in options trading on Tiger Brokers.
Trading Performance: He has over 26,000 followers on Tiger Brokers $Tiger Brokers(TIGR)$ , with his trading ideas read over 10 million times. His year-to-date profit is $150k, and his performance is about 44%.
Click to review the the live on September 26th 2025：
Read more >>
🎉Reviewing Terra’s livestream about Options Trading for Beginners---Part 1
🎉The Million-Dollar Trading Mindset for Beginners---Part 2
1. Options Trading Strategies
Long Calls
Strategy Explanation: A long call is a bullish strategy. When a trader believes the market or a stock will rise, they can buy a call option. The upside potential is unlimited, while the downside is limited to the premium paid.
Example with Nvidia: Using Nvidia as an example, if a trader buys a $180 call option at a premium of $6.37 per share (for 100 shares, $637 in total) with an expiration of 33 days, the break-even price is $186.37. If Nvidia reaches $200 by the expiration date, the profit would be $13.63 per share, or $1,363 for 100 shares, with an effective return of over 200%.
Long Puts
Strategy Explanation: A long put is a bearish strategy. Traders can use it either for speculation when they expect a stock price to fall or for hedging when they already own the stock and want to protect against potential losses.
Use Cases and Example: For speculation, it is more efficient and less risky than short - selling the stock. For hedging, it can offset losses on the underlying stock. Using Nvidia again as an example, if a trader buys a $175 put option at a premium of $5.5 per share (for 100 shares, $550 in total) with an expiration of 33 days, the break - even price is $169.5. If Nvidia drops to $160, the profit would be $9.5 per share, or $950 for 100 shares, with an effective return of about 172%.
Cash - Secured Puts
Strategy Explanation: This strategy involves selling a put option while having enough cash in the account to buy the underlying stock if the option is exercised. It is an income - generating strategy for traders who want to buy a stock at a discount.
Example and Potential Outcomes: On September 22nd, when $NVIDIA(NVDA)$ was trading at $176, selling a $170 put option with an expiration of 26 days would result in collecting a premium of $3.75 per share (for 100 shares, $375 in total). The break - even price is $166.25. If the stock price stays above $170 at expiration, the trader keeps the premium. If the stock price falls below $170, the trader buys the stock at $170, but the net cost is effectively lower due to the premium collected.
Covered Calls
Strategy Explanation: A covered call strategy is used when a trader owns the underlying stock and sells a call option against it. It is a way to generate additional income from the stock, especially when the stock is moving sideways.
Example and Risks: Using Walmart as an example, if a trader owns 100 shares of Walmart bought at $95 and sells a $105 call option, they can collect a premium. If the stock price stays below $105 at expiration, the trader keeps the premium and the stock. If the stock price rises above $105, the trader sells the stock at $105 but still keeps the premium. However, it is not recommended to use this strategy during or overlapping with earnings announcements.
2. Market Analysis and Key Events
Market Conditions
Volatility and Sentiment: The $Cboe Volatility Index(VIX)$ fear index is currently around 16.8 - 16.9, indicating market complacency and a bullish sentiment. Although the market has been slightly down recently, it is still not pricing in potential market corrections seriously. The market is moderately non - volatile and cautiously bearish.
Index Performance: This week, $Invesco QQQ(QQQ)$ has dropped by almost 1%, and $SPDR S&P 500 ETF Trust(SPY)$ has dropped by 0.585%.
Trading Strategies Based on Market Conditions
Covered Calls: With some stocks reaching new highs and then dipping, selling a higher - strike call option can help capture profit and offset paper losses.
Cash - Secured Puts: When favorite stocks fall a few percent from their all - time highs, selling a put option can allow traders to wait for a lower price to buy while collecting premium.
Key Market Events
Economic Indicators: Tara monitors events such as the non - farm payroll report and FOMC meetings. The next non - farm payroll report is on October 3rd, and the next FOMC meeting is around October 28 - 29th.
Earnings Announcements: Earnings announcements can cause significant volatility in stock prices. For example, Nvidia's next earnings announcement is on November 9th.
3. Contract Selection and Risk Management
Contract Selection Criteria
Liquidity: Contracts should have a trading volume above 100 and an open interest above 1,000 to ensure ease of trading.
Time to Expiration: Buyers should choose contracts with at least 30 - 60 days to expiration, while sellers prefer shorter - term contracts (less than 60 days) to take advantage of time decay.
Strike Price: Traders need to understand the concepts of in - the - money, at - the - money, and out - of - the - money options and choose the appropriate strike price based on their market outlook.
Implied Volatility (IV): High IV historically suggests selling premium (puts or calls), while low IV indicates it may be a good time to buy options.
Risk - Reward Ratio: Net buyers should ensure a risk - reward ratio of at least 2:1 or 3:1 for more conservative trading.
Risk Management
Position Sizing: Traders should determine their position size based on their risk tolerance. For a $10,000 account, a 2% risk per trade means not investing more than $200 per contract. Aggressive traders can take on a 5 - 10% position, but should limit the number of trades to 10 - 20 at most.
Exit Plans: Traders should have clear exit plans for both profit and loss. Beginners can take profit at 25%, 50%, or 75%. If a trade goes against the trader's expectations, it is prudent to take a loss and move on.
Advanced Strategies and Adjustments
Rolling Options: If an option trade is not going as planned, traders can buy back the losing option and sell a similar option with a later expiration date to recover some premium.
Combination Strategies: Although not covered in detail in this session, there are more advanced combination strategies that traders can explore in the future.
4. Trading Journaling and Success Principles
Trading Journaling
Importance: Keeping a trading journal is crucial for tracking performance, recording emotions, and learning from each trade.
What to Record: Traders should record the date, symbol, strategy, price, reason for entering and exiting a trade, market conditions, and lessons learned.
Success Principles
Risk First, Profit Second: Always prioritize risk management and know the maximum loss before entering a trade.
Continuous Learning: The market is constantly changing, and traders need to stay updated and learn new strategies.
Emotional Control: Emotions can be a trader's enemy. Traders should stick to their trading strategies and not be influenced by short - term emotions.
Consistency: Consistent trading strategies are more likely to lead to long - term success than random, emotion - based trading.
5. Learning Path for Beginners
Paper Trading: Beginners are recommended to start with a three - month paper trading period to practice the four basic strategies without risking real money.
Gradual Progression
Week 1 - 2: Practice long calls and long puts in paper trading and join the Tiger options trading Telegram group for support and discussion.
Week 3 - 4: Focus on income - generating strategies such as cash - secured puts and covered calls. Read target options materials and consider taking online courses.
Real - Money Trading: Once confident, start with a small amount of real money (e.g., a maximum risk of $200 per trade) and gradually increase as skills and confidence grow.
Mastery: Over time, traders should aim to execute different strategies in various scenarios, analyze their performance, and identify areas for improvement. By 30 days, they should have a clear favorite strategy based on their risk appetite and trading style.
6. Additional Resources and Community Support
4Telegram Group: Join the Tiger options trading Telegram group to practice with other traders, share ideas, and get support.
Tiger Trade Platform: The Tiger Trade platform provides a lot of trading information and a community where traders like Tara share their trading ideas and strategies.
Book on Advanced Strategies: There is a book that contains five additional advanced options trading strategies, which can help traders expand their skills after mastering the basic strategies.
At last, here are some key sentense for every beginner investor
「When you start learning options, what we want to achieve is actually building your confidence towards your first option trade.」
「Understand that strategy selection is actually key in options. At the end of the day, you need to know your market outlook, risk tolerance, and personal experience level to formulate the right strategy.」
「Your success principle is to protect your risk first, then profit second. Always know your maximum loss, never stop learning, and keep your emotions in check.」
🏦For SG users only, open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Comments