Start with the Contract. Then Learn the Trade.

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A contract needs its underlying, exact expiration date, strike and call/put side. A 715 call and a 715 put are different contracts. The same strike on another expiration is also a different contract. The strike is not the option premium you pay.

Both purchased options can lose value through time decay, changes in implied volatility, or an unfavorable entry price. A red candle alone does not identify which contract to buy. These descriptions concern simple purchased options; selling options or combining them into spreads changes the risk.

1. Confirm the ticker and exact underlying.
2. Read the expiration date, strike, and CALL or PUT.
3. Check buy to open versus sell to close.
4. Check quantity, premium, bid/ask spread, multiplier and total cost.
5. Know the invalidation, exit plan, time limit and risk before submission.

Read the whole ticket aloud: “[TICKER], [DATE], 715 CALL, buy to open, [QUANTITY], limit [PREMIUM].” These are fields to confirm, not a trade recommendation.

For a long option, selling to close exits the position. Buying the opposite option does not close the first one. If a live explanation is too fast, pause and ask. If the entry has moved, reassess using the price you can actually get.

HPT’s published chart framework includes EMA 12/22/55, VWAP, volume, and the 0.618–0.65 Fibonacci golden pocket. Start with ordinary candlesticks and work from higher-timeframe context down to the entry chart.

Suggested beginner Fibonacci preset

This is a clean starter preset based on the published framework, not a claim that every setting matches Hollow’s current saved chart. The 0.5 line is the midpoint; 0.65 is the extra golden-pocket boundary.

1. Select a Fib Retracement drawing and open its settings.
2. In Style, enable the eight levels above and hide extra levels initially.
3. Show prices and level labels; highlight 0.618 and 0.65 with the same color.
4. Anchor to the beginning and end of a clear swing. For measuring a pullback, check that 0 sits at the completed move’s end and 1 at its origin. Use Reverse if needed.
5. Save the layout as a drawing template. Match the symbol, timeframe, session, price scale and swing anchors when comparing charts.

Orientation check: on a hypothetical move from 100 to 110, a 61.8% pullback sits at 110 − (10 × 0.618) = 103.82. A 65% pullback sits at 103.50. A level marks an area to study, not an automatic entry.

1R is your initial planned dollar risk. If 1R is $50, a $100 profit is +2R before costs. A $1,000 purchase does not automatically mean a $1,000 planned stop loss. A large possible payout also says nothing by itself about the likelihood of reaching it.

A worked long-option example

Hypothetical teaching numbers, not a live trade or a suggested risk budget. Assume a standard 100-multiplier contract.

Contract quantity = dollar risk budget ÷ planned risk per contract, rounded down.

A $100 practice risk budget allows two contracts in this example before costs. They cost $400 to enter, have $100 planned stop risk, and expose $400 of premium. Include estimated fees and slippage in sizing; reduce quantity if they put the planned loss over budget. If one contract is too much, skip the trade.

The stop is not a guaranteed fill. If two contracts sell at $1.40, the loss is $120 before fees. If the long options expire worthless, the premium loss is $400. A stop-market order may fill beyond its trigger; a stop-limit order may not fill. Confirm your broker’s supported option order types and trigger rules.

A 2:1 reward-to-risk drawing on the underlying does not guarantee 2:1 on the option. Option prices also depend on time, implied volatility and changing sensitivity. If you take partial profits, calculate the result across every contract, not just the best-performing runner.

There is little time for an idea to recover. The option’s sensitivity can change rapidly, and being right about direction does not guarantee a profit. Learn the order ticket and exits in an options-capable paper account first.

1. Define invalidation. Mark the underlying price that proves the idea wrong, an option-loss exit and a time exit.
2. Budget before sizing. Consider the planned stop loss and the possibility of losing the full premium. Set a separate daily loss limit.
3. Check execution. Read the bid/ask and spread. A midpoint quote is not a guaranteed fill. A limit controls price but may not execute.
4. Plan profit-taking. Use plausible targets. Do not hold a failing trade just to reach a large dollar goal.
5. Follow the exit. Do not widen a stop or add solely to rescue a loser. A daily stop is an action rule, not protection from slippage.
6. Know the expiration process. Check broker cutoffs, potential early liquidation, settlement and exercise. Set a time exit before the relevant cutoff.

Equity/ETF options and cash-settled index options can settle differently. Exercise of a long option can create a separate underlying position with its own funding requirements and risk. Do not assume an in-the-money contract simply disappears at the close.

1. Session one: watch the beginner overview and calls/puts. Identify ten sample tickets without submitting live orders.
2. Session two: watch risk management and Greeks. Calculate cost, planned loss, full premium exposure, target profit and quantity for five examples.
3. Session three: watch the chart lessons. Set up the Fib template, mark a swing and explain the invalidation.
4. Then: record ten paper trades with the exact contract, thesis, entry, exit rules, target, size, fees, actual result and whether you followed the plan.

Ten paper trades are execution practice, not evidence of a profitable strategy. Before using real money, be able to explain exactly what you are buying, why, how you will exit and what you can lose.