You picked the right stock. So where did the money go?
Five quick checks. Sixty seconds. Before you click "buy." Normally $29.97. Free today.
You called it. The stock went up, just like you said.
You check your account. Your option is worth less than you paid.
That's not bad luck. It's one of 5 mistakes that eat gains before you ever get to keep them. Most traders make at least one on almost every trade. Most never find out which one.
An option loses a little value every single day, even on days the stock doesn't move. Be right too slowly, and you can still lose.
No target, so you hold. The winner comes back down. Now it's a loser.
A stop loss says, "If the price drops to this number, sell." But bad news can hit overnight. The price opens way below your number and jumps right past your stop. You set it at $4. You get out at $2. One morning like that can wipe out a month of wins.
Ask most options traders 2 questions before a trade:
Most can't answer either one.
The pros answer both, every time, before a dime goes on the line. When you know your target going in, you know when to take the money. When you know your worst case, one bad trade can't erase your good ones.
Don sets his target the same way on every trade: 30% or better on what he puts up, inside 30 days. He writes down the most he can lose before he clicks. The checklist is how he makes sure both numbers are settled first.
I was the Chief Derivatives Instructor at thinkorswim. Then I ran the Trader Group at TD Ameritrade. 7 million everyday traders came through while I was there.
I watched people pick the right stock and still lose money. Over and over. Not because they were wrong, but because nobody taught them to check these 5 things first.
This checklist is what I wish every one of them had. It's one page. You can use it on your very next trade.
Co-Founder and Chief Market Strategist at TheoTrade, with 25 years in the markets. Former Chief Derivatives Instructor at thinkorswim and former Director of the Trader Group at TD Ameritrade, where he helped guide more than 7 million traders. Former market maker. Featured in Business Insider and Investor's Business Daily, and a regular on CNBC and Schwab Network.
If you're chasing a lottery ticket, this isn't for you.
If you want to know your target and your worst case before every click, the checklist is yours free.
A one-page checklist. Five checks you run before you buy any option. About 60 seconds.
No. It's free today.
No. If you can read a grocery list, you can use this checklist.
Put in your email above. We'll send it right away.
