Happy Halloween, traders…

If you think you’re in the right names, trading reliable patterns on strong charts, but still losing…

I know what the problem is.

Timing.

Bad timing can completely ruin an otherwise promising trade.

You can be 100% right on a trade thesis, but if you enter the position too early (or too late) … you might as well be 100% WRONG.

This effect is even more exaggerated if you’re trading options. 

If you’re trading common shares (without leverage), you probably won’t lose more than 10-20% on your very worst days (unless you’re scalping sketchy penny stocks). 

But if you’re trading short-dated options and the underlying stock moves just a few percentage points in the wrong direction, your contracts could lose more than 50% of their value.

On the other hand, this is why nailing your timing can be so rewarding…

A Few % Points In The Underlying Stock Could Earn You Hundreds Of %…

Or Even Thousands of %.

How Timing Can Make (or Break) You

There are several ways in which poor timing can destroy an otherwise excellent trade idea…

Sometimes a setup looks like it’s building into something extraordinary, and then it makes a left turn. 

If the move takes one more day than you anticipated to follow through, and your contracts have already expired, your trade will be completely ruined. 

Other times, you’ll be holding contracts that are deep in the green, trying to determine the ideal time to exit. 

Picking the right stocks to trade is only half the battle. If your timing is off, it doesn’t matter what you’re trading … you’re gonna lose. 

And even if your timing is excellent, the market will test your conviction at every turn. 

You need to read between the lines — and the charts — to find the perfect moment to strike (and the ideal contracts to buy)…

4 Steps To Perfect Your Timing

Options trading rewards perfect timing above all else. 

It’s not easy to master, but if you can nail your timing, you can make a fortune in the options market. 

By picking the right strikes and expiration dates, you can make way more money trading options than stocks.

A weekly call or put option — bought and sold at the right time — can yield single-day gains unheard of in garden-variety stock trading.

That said, if you’re not careful, the variety of expiration dates available can lead to poor decisions. Options chains can be overwhelming.

But don’t worry, I’m here to help. 

First, let’s think about a few decisions that can help improve your timing…

Strike Prices

• Avoid buying contracts too far out of the money (OTM).
  
• OTM contracts come with higher risk and often lead to failure, especially with short-dated options.
  
• If the trade moves against you — even briefly — OTM contracts lose value much faster than at-the-money (ATM) contracts.
  
• Stick with strikes close to the money. “Close enough to be dangerous.” They cost more, but have much higher odds of success.

Expiration Dates

• Picking the right expiration date is key to timing your trades.
  
• If you’re confident in a quick move, weekly options can be a strong choice.
  
• If you’re less confident or the setup is slower-moving, choose longer-dated contracts (a few weeks out or more).
  
• In this ultra-volatile market environment, I’m sticking to short-dated trades. With so much uncertainty, trying to predict moves several weeks out is a fool’s errand.

Entries and Exits

• Always have a plan for both entering and exiting your trade.
  
• Before buying calls, check if there’s a level of strong overhead resistance nearby
  
  • If so, wait to see that level break before entering the trade.
    
• For exits:
  
  • Set a price target in advance.
    
  • Scale out at pre-determined levels.
    
• Monitor contract prices during the day to get a feel for how they’re moving and what range they’re trading in.
  
• Be selective with your entries, exits, strike choices, and expirations.

You can do what I do and use my OMEN Scanner to pick your contracts. 

Happy trading,

Ben Sturgill

*Past performance does not indicate future results. Not typical.