Been looking into call options lately and keep seeing “buy to open” everywhere. I get the basic concept but not sure how it fits into actual trading strategies.
Tried a few small positions but want to understand the mechanics better before going deeper. How do you typically use this in your setups?
Buying options early in a trend is key. I prefer 2-3 weeks out.
Buy to open means going long on calls. I use it for:
• Earnings plays - be cautious of IV crush
• Breakout confirmations - watch for building momentum
• ITM calls - useful for delta exposure
Always check IV before entering.
Blew $800 on my first call option - had no clue about time decay.
Now I always check the theta before buying calls. Learned this the hard way with Apple calls that expired worthless even though the stock went my way.
The premium just disappeared faster than I thought possible.
My approach to ‘buy to open’ call options is simple. Focus on stocks showing strength and make sure they move past your strike price plus the premium. Timing is critical so look for strong setups. I prefer strikes that are within 10% of being in the money and choose options with at least 30 days until expiration. Avoid the trap of buying weeklies that often expire worthless. Set a stop loss at 50% of your option’s cost and aim to take profits when your investment doubles. Discipline is key, especially during emotional moments.
Understanding “buy to open” is key. It refers to starting a new long call position, which gives the right to buy shares at a specific price before the option expires.
Many use this strategy when they anticipate a significant rise in a stock. It’s essential to time your entries well and avoid choosing strikes that are far out of the money.
Focusing on liquid options for stocks you are familiar with helps in reading price actions effectively and steering clear of low-volume contracts that can lead to trouble.