Hello, this is haru.
Starting this month, I have decided to shift my trading focus from day trading to “US stock options.” Today, I will write about the reasons for this, the pros and cons of options trading, and my honest performance so far.
After continuing day trading
I have been day trading Japanese stocks up until now, but to be honest, my profits have not been stable. There are days when I win, and days when I lose it all back. I do have a desire to continue a little longer.
However, day trading requires being glued to the screen throughout the market session, which is a heavy time burden. In terms of capital, I cannot afford to continue in an unstable state. Therefore, I have decided to focus on options trading, which requires less time commitment.
Pros of options trading
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Short time commitment: If you place orders the night before or in the morning, you don’t need to be glued to the screen during the session.
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Can capture large price movements with little capital: You can aim for upside gains with less money than buying stocks directly.
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Losses are limited to the amount purchased: If you only “buy” options, at worst, you will not lose more than the amount you invested.
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Can use time to your advantage: If you choose options with a long expiration date, you can wait for an increase over a period of several months.
Cons of options trading
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Value decreases over time: Even if the stock price doesn’t move, the price will drop just as the expiration date approaches.
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High volatility: A few percent drop in stock price can cause options to drop by several tens of percent.
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Unrealized gains can melt away quickly: They rise quickly, but they also drop back down in an instant.
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Stock selection is important: If you trade stocks with low volume, the bid-ask spread will be large and disadvantageous.
My honest performance so far
In September, I was able to make a realized profit of +817,000 yen through options.
However, entering October, Bitcoin-related stocks dropped significantly, and the unrealized gains I had built up for a while almost disappeared, and I am currently in the negative.
Looking back, the challenges are clear.
I realized that the number of shares, rather than the price movement itself, determines the magnitude of the shock.
From now on
Right now, my primary goal is to establish trading rules and follow them every day. I find that following rules is much harder than creating them.
I will record not only when things go well, but also when they do not. I hope this will be helpful to others who are also trying their hand at options.
#USStocks #OptionsTrading #USStockOptions #LongTermInvesting #TradingRecord
