Trader Q&A – Do we trade stock options?

We always encourage subscribers of The Wagner Daily stock newsletter to ask questions in order to continually strive to master our proven swing trading strategy. These questions can be asked during our “members only” Live Q&A webinars that we hold twice per week, or they may simply e-mail us with questions. When we receive a question that may be of interest to other subscribers or followers of this trading blog, we post them.

Recently, a subscriber named Tom asked the following question…

Hey guys,

Do your ever use options to hedge any of your trades ? How about just buying an option instead of shares? Being a smaller investor, I thought I may buy an option since I can still get some sort of action with your setups and not have to buck up capital. 

Thanks for all the good work. Looking to get Deron’s ETF book! 

Here was our reply:

Hi Tom,

We do not trade options.  As for a hedge, it has never been part of our swing trading approach.  It is important to realize our market timing model automatically controls our position sizing so that we do not take on too much risk when it isn’t warranted.   Basically, our sizing is controlled by the timing model…which allows us to always take the proper risk at the right time.  If we are wrong, it is ok because we have taken the correct size…so there is no need to hedge.

Let me know if this makes sense.  It is a concept that we developed a few years back and has worked well over the years.

Regards,

Rick

Nevertheless, we would like to add that some of our subscribers do indeed take our detailed nightly ETF and stock picks and simply convert our specific entry and exit prices to buy calls or puts on their own, using the entry and exit signals for the stock trade, but we do not provide support for any actual options strategy.

We learned many years ago that mastering and consistently profiting from short-term trading requires a laser focus on just doing what we are good at. Since we have exclusively been trading only stocks and ETFs since our company was formed in 2002, swing trading of equities is where 100% of our focus goes. Newer traders often attempt to find the “holy grail” of trading profits by continually jumping around from stocks to options to futures to forex, but this only leads to being a jack of all trades and master of none. When you have a trading strategy that has been proven to work, it’s a good idea to stick with it.