Do you want to make smart choices with your investment funds but don’t know where to start with option trading services?
Over the past few years, option trading has increased in popularity due to its potential to generate high returns. According to reports, options traders in America make an average salary of $110,139 per year or $53 per hour. However, without research, it can be challenging to identify an option trading service that meets your unique needs.
This guide will help you understand the different option trading services available and how to pick one that aligns with your investment goals and risk tolerance.
What to Look For in the Best Option Trading Services
There are many option trading services available today that promise big returns. One such company is Foxian. As a Foxian client, you can access free and premium trade alerts. This allows you to get started without risking your funds or leveraging their more lucrative calls to take your trading to the next level.
However, it’s important to look beyond marketing claims to find a service that is a good fit for you. Some important things to consider include:
Investment Philosophy – Different option trading services have different strategies and levels of risk they are willing to take. Some primarily focus on lower-risk trades, while others regularly take on high-risk positions. Understand the service’s philosophy to see if it aligns with your goals.
Experience – Consider how long the service has been in business and the background of its traders. Aim for a service with a proven long-term track record versus one just getting started. Experienced traders are better equipped to handle different market conditions.
Communication – Look for a service that provides regular updates on open positions as well as market insights and education. You want your traders to be transparent and available to discuss strategy. Lack of communication can be a red flag.
Costs – Option trading services will differ in fee structures, such as per-trade commissions, monthly/annual subscriptions, or performance bonuses. Understand all costs upfront to factor them into your expected returns. Avoid services with hidden fees.
Research – A thorough option trading service will do in-depth research on trades rather than taking risks hastily. Quality research helps minimize losses from impulsive decisions and gives insights to adjust strategies over time.
Technology – Top services offer trader technology to automate strategies and customer portals to view accounts and positions. Advanced tools improve execution and make trading hands-off for set-it-and-forget-it investors.
Consider several best option trading services that meet your basic criteria and then take a free trial with one or two to get a real feel for their communication, trading interface, and overall fit you before fully committing.
How to Choose an Option Trading Approach
In addition to choosing the right option trading service, you’ll want to consider which option trading strategy fits your risk tolerance. Some common strategies include:
Covered Calls – A lower-risk approach is writing covered calls on stocks you already own. This collects premium income while limiting the upside potential on the stock. Suitable for income-focused investors.
Cash-Secured Puts – Similarly, writing cash-secured puts allows you to generate premium income and potentially buy a stock at a price you set. Risk is limited to the cash held aside.
Long Calls and Puts – Purchasing long options allows speculation on directional stock moves. Risk is capped to the premium paid, but potential percentage gains can be large if the trade works out as expected.
Credit and Debit Spreads – Spread trading includes bull call spreads, bear put spreads, and more complex strategies that reduce risk compared to single legs. It requires more analysis than basic calls/puts.
Understand the differences between these option trading approaches and how each balances risk versus reward. Consider backtesting prospective strategies to gain insight into their behavior in various market scenarios. Make sure the service you choose provides education on multiple strategies to find your best option match.
Evaluating Option Trading Performance
Ideally, you want the best option trading services with a history of making profits over various economic cycles, not just when the markets are trending strongly one way. To analyze performance:
Look at Total Return – Consider gains across all closed positions for the past 1, 3, and 5 years. Average annual return is also an important metric.
Review Monthly Results – Stable, repeatable profits month after month indicate solid risk management versus just getting lucky in a few streaks.
Analyze Drawdown – Maximum drawdown measures how much value was lost in a worst-case period. Keep drawdown relatively low compared to overall returns.
Look Beyond Profits – Study open trade statistics, average win rate and more to understand how wins and losses are achieved. Blindly chasing high returns without understanding the trade process can be risky.
Ask for Case Studies – Review past trades, both wins and losses, to see the service’s analysis and adjustment process over time. Actual trades demonstrate their process better than generic performance charts.
Do your due diligence on reported performance. Independent verification gives more confidence you aren’t just seeing selectively chosen highlights. With the right approach, options trading should bring steady, profitable returns versus long-shot gambling.
Other Features to Evaluate to Choose the Best Option Trading Services
Beyond core strategy and performance analysis, also check that a top option trading service provides:
Mobile App Access – Trading on the go enhances flexibility when acting on new trades.
Customer Service – Get a feel for response time and friendliness of the support team through a test question.
Ongoing Education – A good service expands your knowledge over time, so you gain confidence by taking a more active approach.
Risk Management Tools – Systems like automatic trade closures prevent losses from spiraling out of control.
Customizable Settings – The ability to match alerts and actions to your schedule keeps trading stress-free.
Alternative Asset Access – Look for services that broadly cover stocks, ETFs, forex, futures, and more as your experience grows.
Testing all these product features lets you get the most out of whichever option trading service aligns closely with your unique goals and preferences. Taking a trial or demo is worth the time investment.
Final Thoughts
Option trading services provide a powerful way for investors to boost returns when implemented through a top-rated service. Take your time weighing strategy details, past performance, available tools and other factors to select an options trading partner with a proven approach, skin in the game, and philosophy perfect for your investing personality.
With preparation and the guidance of a reliable platform like Foxian, option trading holds tremendous long-term wealth generation potential for portfolios of all sizes. Through Foxian’s daily livestreams and online community, you’ll learn proven strategies for protecting from the crypto markets.
Frequently Asked Questions (FAQs)
- How much does it cost to join an option trading service?
Option trading companies may charge various fees, but they usually charge commissions, contract fees, exercise and assignment fees, and platform fees. The specific fees are determined by the trading platform or brokerage you select.
2. What is the best way to evaluate an option trading service’s performance?
Traders should look at total returns over 1, 3, and 5 years, monthly consistency, maximum drawdowns, trade details, and case studies to fully understand a service’s process and risk management abilities.
3. How many trades should an option trading service make monthly?
The number of trades isn’t as important as the quality and profitability. Successful services may only take a few high-probability trades per month and let winners run, focusing more on risk-adjusted returns than volume.
4. Is it possible to get a free trial with an option trading service?
Many reputable option trading services like foxian offer new clients a few weeks of free access to their trade alerts, education, and analytics tools to test the fit before committing to a subscription.
5. How long does it take to see results using an option trading service?
Most experts recommend giving a new option trading service at least 3-6 months while following all strategies and guidelines before evaluating true performance and deciding if it aligns with longer-term goals. Short-term single-month trials may not provide an accurate picture.