Timing in Options Trading

It is important to enter an options contract with good anticipation of the possible movement of the options. Although there is no sure way of market timing, an options trader who has anticipated the market movements can develop better strategies and contingency plans. The following scenarios are some of the situations that a successful options trader prepares for:

• Is the underlying stock expected to move in a particular direction in a given period?

• Is the underlying stock expected to move drastically, but the direction of movement is not known?

• Is the underlying stock expected to follow a general trend, but the time interval of the movement is unknown?

• Is the underlying stock expected to more or less remain in a given range?