This is the option trader’s best technical weapon

I am a “tactical options trader”, meaning that I usually look for market signals first (up, down, sideways) and then I “fit” an options strategy to that signal or market view, depending on current market conditions (volatility levels, skew, term structure, etc).

Options trading is all about movement. “How” an underlying moves is every bit as important as “where” it moves. Failure to incorporate this factor into an options strategy can lead to very disappointing outcomes.

We’ve all been there – you get a buy signal on a stock or index, you step in and buy some calls, and then as the stock or index rallies, implied volatility gets smoked and you end up with a few crumbs of profit. Being wrong and losing money is one thing – that is part of the business, but being right and losing money makes you want to put your fist through a concrete wall (this doesn’t work, by the way).

For my money, Market Profile”