Hey Trader,

So, you’ve decided you’re sticking it out …

In spite of the headlines trying to scare you out of the markets and back under the covers …

You’re going to TRADE!

Congrats!

But … especially for people who are newer to trading …

Choosing a trading program and deciding you’re going to trade can be a whole lot easier than actually executing the trades you want to make!

So today, let’s take a minute to look over a few trade ideas …

And “interpret” what they mean, and how they should be executed.

Let’s start off with an easy one …

Here’s a trade we made earlier this month in our new Big Money Shopper program.

This is a simple put buy … about as easy as it gets!

First, we’ve got one of four order types … buy to open, sell to open, buy to close, or sell to close. (Sometimes you’ll see these abbreviated at BTO, STO, BTC, or STC.)

Obviously for a new trade, you’re going to see an opening order.

In this case, we are buying these puts.

Next, I specify the number of contracts.

For this AAL trade, I wanted to hold five contracts of these puts. Of course, trading accounts and risk tolerances vary, and you just might like some trades more than others, so if you’re going to follow along with a trade idea, you might want to adjust the number of contracts to suit your own preferences and abilities!

Then you’ll see the equity we’re trading.

In this case, I was targeting American Airlines Group (Ticker: AAL) …

Now we know what we’re doing and what we’re trading, so we need to dig into the contract specifics.

In the example above, we went with the June-expiration 17-strike puts.

And of course, since we only want to make trades that are optimized to deliver good returns, I always have an entry price that I am going for. In this case, I wanted to pay $0.80 per contract, but I was willing to pay up to $0.82 per contract.

Options prices move fast, and sometimes I can’t even get in at the price that I really want to – especially because I wait several minutes after sending out a trade alert to make my own trade (in the interest of keeping things transparent and fair!). Sometimes that means I miss a trade I like, and I’ll have to decide whether or not I’m willing to adjust my entry price, or if missing my desired price means I’m sitting out altogether.

In this case, I got lucky, and actually managed to buy in for $0.78!

And the luck didn’t stop there, because this trade quickly went in our favor as AAL dropped …

In fact, just a few days later we closed out three of our five contracts …

Notice that this trade alert has all of the same “ingredients” as the one above – but this time, the order type is a sell-to-close!

If you chose to execute a different number of contracts, you’d want to adjust this closing order to suit your own trade plan. So if you chose to open one contract, you might want to take your profits (or you could let it run – but I always like to put at least some money in the bank when I have it!), or if you opened 10, maybe you’d want to close six or seven.

I ended up closing the final two contracts just a few days later for $1.27, bringing my total return on this trade to +61%!

Now … straightforward is nice, but personally, I LOVE spread trades, because they open up a whole world of possibilities when it comes to profiting and risk-management.

In my Nitro Trader program, I get to make my “no rules” trades … which means the trades I REALLY want to make!

And a lot of times … those are spreads.

Take a look at this trade I executed on uranium stock Cameco Corp. (Ticker: CCJ).

Butterflies are quite possible by favorite type of trade to make … but a lot of traders are intimidated by them!

Really, they’re no more complicated than any other type of trade … you’re essentially just executing several trades at once!

So, we know we’re trading CCJ … and you can see that we are buying this trade to open.

Now, you do need to know the “pieces” of a butterfly trade. Check out a quick primer here if you’re not familiar.

This is a “broken wing butterfly” which simply means the “wings” of the trade (the upper and lower strike prices) are not both equidistant from the “body” (middle strike).

In the trade above, I wanted to open eight contracts of the May 20th (that was the standard May expiration) 25-30-24 call flies.

Let’s break that down …

I want to buy-to-open eight contracts of the May 25-strike calls.

I want to sell-to-open sixteen contracts of the May 30-strike calls.

Finally, I want to buy-to-open eight contracts of the 24-strike calls.

And when I execute all three of these trades at once, I want the total cost to be between $0.70-$0.80.

You won’t even have to do the math – your trading program should do that for you as you’re inputting all three legs!

See? Butterflies aren’t that intimidating … and most other spread trades aren’t, either.

The goal of the butterfly is for the underlying to finish as close to the middle “body” strike as possible …

So as CCJ neared $30, I started taking profits …

I sold-to-close half of my butterflies for $1.20, and the other half for $1.45.

Since we are selling-to-close, we are really just executing the opposite trade that we made when we opened.

So here we would be selling four of the May 25-strike calls …

Buying eight of the 30-strike puts …

And selling four of the 34-strike calls.

All in all, I walked away in a matter of days with a cool +70% win!

If you’re new to trading, trade alerts might look intimidating at first …

But once you sit down, and just go through them step-by-step (and leg-by-leg, in the case of spreads!) you’ll see that all of the information you need is there right in front of you!

So if you’re ready to start trading these historic market conditions …

Make sure you’ve found the Option Pit trading program that is right for you!

Not sure where to start? Our Customer Care Team can help you find the program that’s right for your budget, skill, and risk tolerance. Give them a call Monday through Friday during market hours at 888-872-3301.

Or might I suggest …

Big Money Flow for straight-forward, typically single-leg trades …

Or Nitro Trader, if you’re ready to kick your trades up a notch!