The Perfect Swing Trading Alternative for Option Traders

Michael C. Thomsett

Options, those high-risk, short-lived, and speculative instruments, can be used as a valuable alternative in swing trading strategies. The flexibility of options allows you to use either calls or puts, to go long or short, vary the number of contracts, or combine different approaches based on market conditions.

The “swing trader” moves in and out of stock positions based on very short-term price movement (swings). The strategy relies on the tendency of prices to overreact to both good and bad news, creating exaggerated short-term price movement that will correct quickly, normally within a few trading sessions. In other words, short-term price movement is erratic and ...