How do I know which trades to make?

How do I know which trades to make?

Jim posts new OFI trades every Thursday morning.

A Thursday Trade Alert may contain multiple new-trade recommendations, not all of which are appropriate for new traders. Jim recommends that you start by trading one contract for a “put credit spread” whose expiration date is two or three months in the future.

• Why just one contract, which represents 100 shares of the underlying stock? New options traders are often nervous that something will go horribly wrong, so trading a single contract with Options for Income is a low-risk way to prove to yourself that those fears are groundless.
• Why a put credit spread? Because that kind of options trade is conservative, educational, and has controlled best- and worst-case scenarios – plus you get the immediate payoff of having cash deposited into your account.
• Why a two- or three-month expiration date instead of a faster one-month expiration date? So that you have time to settle into Options for Income as you watch your trade develop. That said, you can choose to enter faster trades right away — some expiration dates are only 43 days away — if you’re prepared to ramp up quickly. In particular, you’ll want to see Does this roll alert apply to me? in case rolling is needed for your fast trade.

You’ll find that once you’re over the hurdle of placing your first trade, this low-risk method of earning income all starts to make sense.

Lastly, when looking at the OFI homepage, please note that each trade is labeled as either New Trades or Rolls next to the Alert date. New members should NOT use the Rolls to initiate new trades. Rolls are only relevant after you've been in the service for a few months and have older positions that need to be "rolled".