If you’ve been following New Money Crew for any length of time, then you know that I love trading with my readers…
Not only does that allow us to know what the big institutions are trading and how much option premium they’re shelling out in real time…
It also gives you direct access to me to ask the questions you need to know to become a better trader.
Of course, you can always send your questions about topics you want me to cover to [email protected]…
But that real-time factor can be a game changer because it’s almost impossible to be aware of what we don’t know until we see it right in front of us.
And your questions help me teach you exactly what you want to know, making this New Money Crew ecosystem that much more valuable to all of us.
This past Thursday, a member of the War Room asked what is the minimum option premium amount I look for before I take a trade.
It’s a great question, but it’s only half of what we need to know before we settle on a number…
Minimum Options Premium: It’s Not Just ‘How Much’
Whenever we look at institutional order flow, we’re getting a raw feed of information. And it’s up to us to decide what that trade is telling us…
Like we saw last week with Chewy options hitting the wire… Just because we see puts being traded isn’t always an indication of that trader’s conviction — we’re dealing with a similar concept when looking for our minimum options premium level.
The size of the bet matters, but so does the size of the company that’s being traded.
For example, let’s take Camping World Holdings inc. (NYSE: CWH), which trades 1.6 million shares and 6,000 options a day on average, and Uber Technologies Inc. (NYSE: UBER), which averages 34 million shares and 89,000 options contracts a day…
A $200,000 bet in Camping World is a much bigger, splashier bet than trading the same amount of money on an Uber just by looking at the average volume. It’s that simple…
Check out this clip from the War Room and let’s talk about the minimum option premium we want in a trade.
And if you have any pressing questions about the markets and options trading, leave a comment or drop me a line at [email protected]!
P.S. I rarely get excited about a single stock…
But there’s one company that should be on everyone’s radar right now…
It typically performs well around elections…
And with the midterm primaries around the corner… I see the future looking bright for this company…
That’s why it’s my No. 1 Accelerator Stock for April 2022.
