How to Plan Individual Options Trades

Posted on 27th February 2019
How to Plan Individual Options Trades

To get started with options trading there are various levels that you need to cross. Proper planning plays a major role here to be on the success ladder. Some of the methodology to follow while identifying trading options are listed below. When you are literally prepared to start buying and selling options, reconcile all the knowledge that you have gained about options trading and decide which trades to start. Here we are suggesting some routine steps to be followed to initiate;

  • Make your forecast
  • Mark your targets
  • Select a strategy
  • Decide the position size
  • Entry Tactics
  • Exit Plans


Once you have done your homework and Identified an opportunity to trade, be prepared to plan your moves well in advance to make a smooth entry and a safe exit. While investing in stocks, people tend to invest in a stock where they see a sure shot increase in the value, so that it would end up in a profit or on a stock which is about to drop in value to make a profit from its fall. One of the major benefits of options is; multiple methodologies are available to be tested out to grab your profit from the forecast.


It isn’t compulsory to set your targets for each and every trade you do, but yes it will be a good idea to set your targets before you begin to trade. There should be two targets that you need to follow, one should be set on the amount of profit you wanted to earn while the other target must be set on the time limit to reach a particular set profit. This will definitely help you to determine whether the trade was successful & secondly limiting the time will not engage your money to drag a trade.


You will be amazed to know that there are numerous choices in options to grab the profit. The moment you make your forecast and set your expectations on the price of a security to move, you need to analyse and choose the apt strategy on which you can rely on to your outlook and the targets which you have set. To make it effortless for you, we have listed them in various categories;

  1. Strategies for Bullish market,
  2. Strategies for Bearish market,
  3. Strategies for a neutral market,
  4. Strategies for the volatile market.


When your strategies are well planned, decide the size of your positions and make a note of the capital that you are willing to risk. Perceive the importance of sizing to be paramount in controlling your budget. Even though you are confident, that the trade would end up successfully, it is always prudent to limit the capital's percentage. Position sizing is mostly about the amount of capital you are involving in risk, and not just about the money you put in a trade.


When you are through with the above-mentioned steps and planning your entry, the most vital step is to wait for the right opportunity by analyzing the graph of certain security you wish to trade. When you observe a drastic rise in trend of that security you should be watchful to make the entry in a clever way without much hurry. But in certain cases, immediate action may also be needed, so probably having some funds deposited with your broker is always a good idea that would easily enable you to place orders whenever you need to, because any such delay in adding the money to your account may result in losing that opportunity to win.


While planning for the entry point you should be well prepared for the exit plan too. If you have placed some targets for a trade then planning the exit point is also required when you reach the level of profit you targeted or when the set time limit passes before making it. On the other hand, if it has multiple positions, then you need to decide whether you are planning to close them simultaneously or individually in a set pattern. It is also vital to decide the point at which you will close all the open positions to cut down the losses.

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