Tackle Today: Risk graphs are powerful
July 16, 2020
≈ Tools for options traders ≈
Traders,
A risk graph is a valuable tool for an options trader. They can be intimidating if you do not know how to use them, but they are simply fancy calculators that help you better understand your potential gains, losses, and outcomes of your trade.
You can use a risk graph to better understand a position you are currently in. But you can also use a risk graph to simulate what your trade will look like if you build it out. Traders use risk graphs at the beginning of a trade before they enter, throughout the trade to understand what can happen, and to model what their trade would look like if they add to it, change it or adjust their position.
Here are 3 simple things to start with if you want to learn how to use a risk graph.
- Look up one of your current positions and calculate how much profit you would have if you hit your target price or how much loss you would have if you hit your stop loss.
- Build a simulated trade that you are thinking about entering and calculate your potential profit and loss as you did above.
- Build a trade just like you see one of the Coaches do in a webinar, in simulated trading, using the risk graph just to mirror what you are learning.
Here are a few tutorials on our YouTube channel if you’re looking for somewhere to start: https://www.youtube.com/c/TackleTradingTeam/search?query=Risk+Graph
If you have not learned the power of the Risk Graph yet, this is a tool that is worth your time and effort to be able to use.
#TeamTackle
Chart of the Day
VIPS Risk Graph Example
In last nights webinar, Coach Noah used the Risk Graph tool in many examples to teach how a trader can combine put options with stock positions to protect your risk. If you own 100 shares of stock and buy 1 put option, you can limit your downside risk.
Video of the day
How to cover your assets during earnings season
If you missed last nights special webinar, catch the replay here. Coach Noah teaches the team how to use put options to protect your stock positions in, around and through the earnings reports.
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