Swing Trading with Options

Swing Trading in itself is a very powerful technique, and is always more profitable than 'buy-and-hold'. Swing traders usually expect to get profits of 4-10% per trade over a few days, which is not bad in anyone's books. Swing trading with options takes these profit expectations to a whole new level, and you can easily expect to get gains of 40-100% per trade. This happens because of the incredible power of the leverage of options, where you are gaining control over a large block of stock for a fraction of the cost. The short time periods that make up swing trades are perfect for option traders, because the effects of time decay are minimised, and so your profits are not lost as you hang on to a trade. The other huge advantage of swing trading with options is that you get access to several trading techniques, which means added security to your trading. I firmly believe that it is important to diversify both your stocks AND your trading techniques in order to minimise risk.

Swing Trading with Options: some ideas

  • Sell Credit Spreads or Naked puts - credit spread trading is the simplest technique that you can apply to swing trading. The idea is that you simply take advantage of a prevailing trend, and sell bear call spreads or bull put spreads each month as the trend progresses. In a strongly positive trend, you can sell naked puts for even better profits, provided you have enough margin. I have used this as my basic portfolio building technique for several years, and regularly make between 8-15% profit on my portfolio each month.
    What you need to know:
    1. Trend Analysis - click on this link;
    2. Credit Spread trading - click on this link;
    3. Examples of Credit Spreads - click on this link;
    4. Trading Naked Puts - click on this link;
  • Trade DITM Options - DITM (Deep-in-the-Money) options takes advantage of maximum Delta, which means that all the price movement in a stock is captured in the price movement of the option. Because of the leverage presented by options, the profits are generally more than double those that you can achieve by using swing trading. Instead of buying stock or short selling stock, you buy calls and puts respectively. This is a very powerful option trading technique, and in fact, is so much better than swing trading simply with stocks that it is hard to understand why more people don't do it!
    Here is what you need to know:
    1. Trend Analysis - click on this link;
    2. Technical analysis for swing trading - click on this link;
    3. DITM Options - click on this link;
    4. How to trade DITM Options - click on this link;
    5. DITM options and ETF funds - click on this link;
  • Buy Calls and Puts - this is how you can make maximum use of the leverage provided by options. Unlike DITM options, this does not maximise the use of Delta, so your option will not change in price as quickly as the stock price. However, because you pick up the options very cheaply, you can easily make profits of 100% within a couple of days. You can also just as easily lose your cost of trade if you read the swing incorrectly! This is by far the most exciting form of options trading, but also the most risky, so I only recommend doing this after you have gained some experience in the other techniques.
    What you need to know:
    1. Trend Analysis - click on this link;
    2. Technical analysis for swing trading - click on this link;
    3. Buy Calls and Puts - click on this link;

Good Trading!

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  • Got the hang of swing trading? Now apply that to swing trading with options, and see your profits take off!


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