A Full-Time Independent Options Trader Explains How to Combine Patience & Discipline to Beat the Markets.
We brought in a professional options trader to answer questions on using options profitably.
David Blair is a full-time independent trader. David started trading stock options 15 years ago after a close friend suggested he may find it enjoyable and profitable. After going through a 5 year self-taught learning curve he found success with a simple, rules based trading process that he finds is both enjoyable and profitable as a full-time job. At the encouragement of friends David began teaching his methodology and sharing what he has learned through his website(thecrosshairstrader.com) and through social media, helping others find the same success. He is celebrating 10 years of providing educational services. Why crosshair? Trading in the crosshairs is a simple to understand trading strategy whose center of interest is based on potentially profitable, repeatable price patterns designed to help you better control any number of self-defeating emotional habits that we all have experience both in and outside the charts. When focus is combined with patience and discipline, trading in the crosshairs can help you attain a higher possibility of success by pinpointing an exact entry and potential exit for each trade, while managing the risk associated with speculating. What follows is a recap of the Q&A. For the full transcript please GO HERE.
What are the normal signs of stocks rising in the first 2 hours period with gains in the 15% to 50% range? — BenedictCarnagio
If there’s anything “normal” about the market I’ve not yet found it. I run a pre-market scan for early movers that may meet my trade criteria
Do you think volatility will come in the rest of the week? — FamisDave
I have no idea. Predicting what the market will do is not a part of my thought process. I trade price as it develops. $SPY
What is your method for searching for new stocks? Can you explain some of the rules surrounding entry and exit? — michaelbozzello
I have about 800 stocks/ETFs in my workspace based on option activity and trading volume. I’ve developed indicators on 2 timeframes (W/D) that screens stocks for moves away from S/R levels. I then look for next S/R as exit targets and/or trailing stops for new highs/lows. Recent member trade… $FOXA as an example.
What’s your preferable set up and under what market conditions? Thank You in advance. — BrotherBill01Bullish
In a low volatility/trending market I trade box breakouts for swing trades in the direction of the prevailing trend… $SPY When in the CHOP I trade between S/R areas and use those areas for targets … $SPY
What do you use for ‘sources’ for your information? — JP415
Not sure what you mean by “sources for your information”? I trade price. I use the TradeStation platform for my charting/price information. News feeds (e.g. CNBC) are useless “noise” to me.
How can a newbie get into options? — McCarthyWill
I was a “newbie” once. And there is not a mistake you are going to make that I have not made already. Keep it simple. Find a mentor.
Sorry if this was already asked. Do you have reading recommendations on options strategies for the beginner? — LiveWell57
For every book you will find different strategies/ ways to trade.I keep option trading simple. I buy time (at least 3 months) & in-the-money.
2017 % return with your options strategies/trades vs 2017 actual % return in market? — 7407h
I post my monthly and YTD gains in my stream each week. But here you go YTD …
What pre-breakout indicator do you recommend? — canamrn
I’ve developed my own signals in @TradeStation platform. As a mentor I suggest developing your own way to trade breakouts. Claim it. Own it.
How do you look at option pricing vs risk/reward? — HeyShoe
I do not look. Not part of my process.
Do you use future options at all? Seems SPAN margin would be great for smaller accounts with defined risk? — ukman
No. I do not.
Hello, If you buy a call option, do you want to be in the money? Also, how far out do you recommend to stop dk — dannyw23
I keep option trading simple. I buy time (at least 3 months) and in-the-money options. Helps me manage risk.
I would like to understand, the best time to expiry for call options. Is leap worth the premium? — Kirublue
I buy time (at least 3 months) and in-the-money options. Leaps are great for long term investors. But I’m a trader so I do not trade them.
How does one determine which month to trade with puts,calls? Thanks,keep up the great work! — Flash_Trader
I keep option trading simple. I buy time (at least 3 months) and in-the-money options.
As more of a swing trader, do you have any scan setups that have helped you find good #options plays? — 10Bagg
I’ve developed my own scans in Tradestation.
Wwhich strategy have you used that offers greatest number of successes? — orville_m
Different strategies work in different markets.A breakout strategy is for a low volatility trending market; not so in the CHOP.
Why do MMs or Algos love to make options expire worthless? — frank2029
I have no idea about what MMs and Algos love or do not love. What they love does not affect my trading. I could care less. Noise to me.
Name 3 stocks you think will rise and 3 stocks you think will fall in the next 2 weeks. — elliotgreen
I have no idea. And if I said I did you should leave immediately. No one can tell the future. $SPY
What are your thoughts on covered calls? Do you do it? Or do you prefer another income strategy? — scheplick
I go long calls or puts in the direction of my trade set-up. That’s it.
Calendars, verticals, strangles & straddles: do you have a fave? Do you get frisky with risk-on ever? — bearcharts
None of these are part of my process.
I am a noob and the term options trading intimidates the heck out of me. How to start slow aside from reading up. — ony2k
Start slow. Learn through experience. Find a mentor who is not intimidated by options trading.
Instead of buying an ETN like TVIX, etc. Would buying puts and calls on SPY be Safer/+Rewarding? How would you? — bullshitfinder
I do not trade TVIX. I do trade $SPY $DIA $IWM etc. Recent members trade: dotted line…hit our trailing stop.
I would love some daily routine and the products you use and what you do on bad days? — howardlindzon
Run scans in the morning and review my watchlist for potential trades. On bad days I go to the gym which helps explain why I’m so buff. ; )
Is it feasible to simply trade off patterns /signals in the charts of options and forget about the underlying? — Nev17
I use the charts of the stocks themselves to trade the options. I do not use options charts. Exit when trade is not working & expiration won’t matter. LEAPS wont help you avoid losers & certainly wont make a good “trader” out of you.
Thanks for the questions & thanks to @StockTwits for inviting me. Unanswered question? You can reach me here.
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I am the Director of Community for StockTwits. Follow me @michaelbozzello.
