Learn trading ideas & strategies from TradeKing's experts

Upcoming Live Events
More live events...
Learn it. Trade it.

Open your TradeKing account today!

Upcoming Live Events
More live events...

All-Star Option Traders


You’re an All-Star if you’re an advanced option trader. All-Stars have been making five or more options trades per month for several years. As an All-Star, you have depth of knowledge of implied volatility and use it to anticipate risk and opportunity. You live by the Greeks for risk-reward analysis and position management. Although these analytics provide forecasts for option price behavior, you take them with a grain of salt since they may not always be reliable. All-Stars possess excellent risk management skills and do not hesitate to adjust or exit a position when necessary. You roll options with proficiency. You’re very comfortable using the three-way interplay of risk, reward and probability of success to analyze trade opportunities and manage risk of your existing positions. You rarely short naked single-leg options, rather opting to trade a spread for improved potential return on investment and lower risk. All-Star trades can be quick, mid-range, or long in duration, using time to his or her best advantage depending on the opportunity. Traders at this skill level are proficient at running two-, three- or four-legged trades such as butterfly spreads and condors, and trades with multiple expiration dates. You track industry news and adapt as the marketplace evolves. Monitoring the relevant news of any holdings and their sectors is second nature for All-Stars. Even though you already know a great deal, an All-Star Options Trader is always learning, always adjusting, always growing as a forever student of the market.

As an All-Star Option Trader, here’s how you can round out your skills:

  • Hone your trading strategies and your order-entry placement
  • Understand synthetic option positions and use this to aid in your analysis of current trading opportunities

All-Star Option Traders can improve by:

  • Reviewing option strategies geared towards the All-Star skill level
  • Continuing to use TradeKing’s Options Scanner and Options Strategy Scanner, both from iVolatility.com, to find potential option trades
  • Continuing to analyze potential option trades and holdings with TradeKing’s Profit + Loss Calculator
  • Anticipating and planning for all possible outcomes for your investments, not just the positive scenarios
  • Inquiring members of the Trader Network to explain their trading analysis
  • Challenging members of the Trader Network with an alternative point of view
  • Journaling your trades with Trade Notes to record your trading thought process
  • Attending or watching TradeKing’s free educational webinars, geared to the All-Star skill level

All-Star Option Traders should steer clear of the following:

  • Resist the urge to buy low-priced options because they “seem cheap”
  • Do not be cavalier if holding an options position within one week of the underlying company’s earnings announcement, or other planned news event
  • Resist the temptation to ignore any worthless options you may hold since they can come back to haunt you
  • Do not be careless if holding options positions through expiration week
  • Neglecting to manage your potentially unlimited risk aggressively on a short option position
Option strategies entail risk and are not appropriate for everyone. Before trading options, you should review Characteristics and Risks of Standardized Options. Some option strategies involve multiple positions simultaneously. These multi-leg strategies incur additional commissions and may invoke special treatment when preparing your taxes. If you are unsure about how a particular strategy may impact your financial picture, please consult a tax professional before trading.





Related Strategies

1362 Short Index ETF
Short Index ETF An index exchange-traded fund is typically comprised of most or all of the stocks that make up a particular index, such as the Dow Jones Industrial Average, the S...

405 Christmas tree bfly w/Puts image
Christmas Tree Butterfly with Puts You can think of this strategy as simultaneously buying one long put spread with strikes D and B and selling two bear put spreads with strikes B and A. Because the long put spread skips over strike C...

401 Skip Strike Butterfly w/ Puts Image
Skip Strike Butterfly with Puts You can think of this strategy as embedding a bull (short) put spread inside a long put butterfly spread. Essentially, you're selling the short put spread to help pay for the butterfly. Because...

More strategies...

All-Star Analysis

Price discovery on 05/16/2011
in a free marketplace, the process of determining a security's price via supply and demand, or through the matching of bids and offers.

An Example of Buying Puts Instead of Short Selling Stocks on 01/21/2011
Let’s say you’re bearish on a stock that’s currently trading at $70. You could buy a 70-strike put with no special rules or margin...

Tax Day Fun: 2014 Edition on 04/15/2014
Tax Day. It’s a mind-numbing, pencil-point-destroying blot on everyone’s calendars – but that doesn’t mean you can’t inject a little fun...

More analysis...

On-Demand Videos

16839 Trading and Taxes What you need to know 154x116.png
Trading & Taxes: What You Need to Know

It’s everyone’s favorite time of year and TradeKing’s own Mike Rasmussen is ready to help make this tax season a...


43941 Prob Calc part IV 154x116.png
Probability Calculator Tutorial Series
Part 4: Introduction to Standard Deviation

Our Probability Calculator can help you estimate your probability of success for any options strategy. Just pick...


524 Tools: P&L Calc
Profit + Loss Calculator and Options Trading

Join Brian Overby as he explains how to use TradeKing’s Profit...


More videos...