By being patient and waiting for such opportunities, a larger position size can be taken, and your risk is limited no matter how volatile the asset. If volatile stocks aren't your thing, you can trade calm stocks but you can still make big returns.

You do this by trading larger positions—a larger position size relative to the size of your trade when trading volatile stocks. No matter what type of stock or asset you trade, you control your risk, which controls your position size, which puts how much you make in your hands.

Larger position sizes can be harder to exit and cause slippage , so this a something to be aware of. Avoid thinking in absolutes.

You can opt to take a smaller position size with a larger stop loss, or a larger position with a smaller stop loss that is closer to entry price. In either case, the risk is controlled, but by being patient and waiting for opportunities where the stop is small—which means a larger position—and the potential reward is big, any asset can be turned into a great trading opportunity.

Historic volatility and returns, while relevant for choosing which markets to trade, shouldn't be the basis for assessing how much risk or profit potential is involved—the risk is determined and varies on every single trade. The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results.

Investing involves risk including the possible loss of principal. Trading Day Trading.

2. Trend Trading Strategy

Full Bio Follow Linkedin. Cory Mitchell, CMT, is a day trading expert with over 10 years of experience writing on investing, trading, and day trading. Mitchell founded Vantage Point Trading, which is a website that covers and reports all topics relating to the financial markets. He has a bachelor's from the University of Lethbridge and attended the Canadian Securities Institute from to Read The Balance's editorial policies.

Reviewed by. Full Bio. Once you understand the components of this trade, you can find dividend collars with a little research. I have not had trouble finding them at all; last month, I opened five of them. But these are not fixed strategies, since the timing of entry is key. Another question involves a perceived loss when a put is exercised: "If I exercise the long put and sell stock at the strike, I have to take a loss on the put.

To understand the dividend collar, you need to get away from the traditional view of each option as separate trades. Because you open a short call and a long put, think of it as a single position. The long put is paid for by the short call, so your basis in the collective option positions is zero or perhaps a small credit. This means that when the last trading day arrives as it did this past Friday , one of two outcomes is likely to occur:. In both cases, you have a profitable outcome, based largely on earning the dividend, and without any market risk. This week, two of the dividend collars with April puts were "calendar" dividend collars, meaning the short call expires in May.

I think this is one of many ways to do a dividend collar, especially if you don't mind earning the dividend and then converting to a covered call. Here are the two outcomes:.

The calendar version of the dividend collar leaves a lot to be desired. It's easier to find because the later-expiring call has more time value.

But you cannot rely on the situation like General Dynamics GD , in which I was able to offset a profitable call for favorable change in the stock via put exercise. It's much better to seek out the rarer but more realistic same-month option expirations. Remember, though, the virtual portfolio's trades are for educational purposes, so we can learn a lot by entering strategies that seem good at first but don't turn out as well as we thought.

By Michael Thomsett of ThomsettOptions.

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The stock market offers virtually any combination of long-term opportunities for growth and income, as well as short-term investments for trading gains. Michael Thomsett. This means that when the last trading day arrives as it did this past Friday , one of two outcomes is likely to occur: The call is in-the-money and your shares are called away.

The put expires worthless.