DayTrading with Options

DrDave

Id like to start DayTrading(with options).
Does anyone have suggestions how to start using the Technical Scan Workbench to find candidates?

markd

Very, VERY risky proposition. If you want day trade options, it would probably be better to trade options on index futures (or the futures themselves). They are much more liquid, have tighter spreads and are less susceptible to news.

Volume in many stock options is erratic (maybe a few leading tech stocks are exceptions), spreads can be very wide, and surprise news can wipe out your position permanently. Also, except for very close to expiration, option prices do not always move commensurately with stock prices. Options dealers do not want to lose money and they are very smart and very agile. If you want to make money, you have see what's coming before they do and they do nothing else but trade the options they specialize in. What all this means is, as a retail player, you can be right on price direction and still lose money. The leverage and price changes look attractive, but it works against you, too. Your timing in predicting meaningful stock price changes must be excellent - not just for entries - you can't be caught off guard when you are in a position. Unless you have huge capital and really understand the math, its a very hard way to make money and an easy way to lose it.

But to actually answer your question: to day trade options you probably want to scan intraday; the Stockcharts scanner doesn't do that. In any case, if you are determined to do it, you should probably choose a few very popular, very liquid stocks with more or less rational and regular chart patterns. Get to know them and how they move very well before you put up real money.