Learn How to Trade Options (Collection)

3. Entering and Exiting Option Trades

Often, the success of an options trade is strongly influenced by how carefully the entry and exit prices are negotiated. The gain or loss of $.10 per share in a stock trade is usually insignificant, whereas in an option trade, it can make a huge difference. Suppose that you buy an option for $2 per share and later sell it for $3 per share. The profit of $1 per share represents a nice 50 percent return on your investment. If you could have shaved your entry price by $.10 to $1.90 and managed to pad your exit price by $.10 to $3.10, your profit of $1.20 per share represents a dramatically improved 63 percent return.

The point here is that, in options trading, it is worthwhile for you to work at achieving good ...