TECHNICAL OR FUNDAMENTAL?
Q: Which is a better form of analysis to use when trading options, technical or fundamental?
A: Talk about a loaded question! Well, when trading options, the fact is that the life of an option is limited to the terms of the contract. Since the majority of options traders focus on contracts that expire within three months, itís plain to see that fundamental analysis really isnít going to help much.
Thatís not to say that certain fundamentals wonít be helpful in making a decision to place a trade, but you probably donít care whether that offshore drilling company is projected to grow at a 15% annual rate for the next five years. Youíd rather know if other traders are buying or selling on shorter term news. Fundamental events that will help you understand whatís going on in technical charts include earnings reports, press conferences, industry forums, shareholder meetings, and other news that will find its way to the financial news stations or journals.