(by 5 people)
Getting Started with Options Trading
Several months ago I got interested in learning to trade options. All I knew at the time was that trading options was better than trading stocks because of the increased leverage and ability to manage risk. What I wasn't prepared for what all that there is to learn and how being an option trader is different than being a stock trader.
So, this lens is a summary of how to get started in learning to trade options -- all those questions that I had when I was getting started such as what broker to use, where to take classes, and which tools do I need.
Along the way, I've also started a blog about how things are going, what I'm learning, and what I'm doing.
Brokers for Option Traders
- Think or Swim
- The BEST broker -- no one else comes close.
- optionsXpress
- optionsXpress offers custom trade tools for experienced and novice stock and options investors. Come see why Barron's voted us Best Online Broker 4 out of 5 years!
- Options House
- A new comer. Looks good but no real experience with them.
- Trade King
- If I wasn't so devoted to Think or Swim, I might use these guys.
Where to Take Classes About Options
- Options University
- Options Trading Strategies for Safer Investing and Bigger Profits by Options University
- The Pristine Day Trader - Day Trading
- Daily and Real Time stock recommendations for active day traders - Day trading education through monthly seminars and free online educational reports - Ranked as the #1 day trading web site by Barron's.
- Optionetics - Your Investment Education and Options Trading Resource
- Learn to trade options with Optionetics, your investment education resource. Sign up today for our free trading workshop.
- Investools Investor Education: Trading & Stock Market Courses & Investment Classes
- Investools offers investor education, trading and investing courses. Register now for a free stock market Introductory Class in your area.
Become a Master at Technical Analysis
Very comprehensive & excellent ebook by Price Headley
Highly recommended -- Trend Strategist is Price Headley's new book covering all facets of technical analysis. Covers all the indicators, oscillators, chart patterns -- everything.Also, here's a great site full of videos about option trading totally free: Options Trading Greeks
Options Strategies
Brief overview of what option strategies are
An option strategy is implemented by combining one or more option positions and possibly an underlying stock position. Options are financial instruments that give the buyer the right to buy (for a call option) or sell (for a put option) the underlying security at some specific point of time in the future (European Option) or until some specific point of time in the future (American Option) for a price (strike price), which is fixed in advance (when the option is bought).
Calls increase in value as the underlying stock increases in value. Likewise puts increase in value as the underlying stock decreases in value. Buying both a call and a put means that if the underlying stock moves up the call increases in value and likewise if the underlying stock moves down the put increases in value. The combined position can increase in value if the stock moves significantly in either direction. (The position loses money if the stock stays at the same price or within a range of the price when the position was established.) This strategy is called a straddle. It is one of many options strategies that investors can employ.
Options strategies can favor movements in the underlying stock that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility. The option positions used can be long and/or short positions in calls and/or puts at various strikes.
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New Option Trader
This is my blog...
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Recommended for Learning about Options
How to Read An Options Chain
Quick introduction to reading an options chain
This guy does a nice job of explaining how to read an options chain for Microsoft.
Call Option Chain Explained
The basics on how to find a call option chain and understanding the details.
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8 Comments:
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Jules_Dawson
Hi newoptiontrader, Posted February 16, 2008 |
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tanady
Waw.. great lens buddy.. Awesome!! Posted January 27, 2008 |
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drdan
Nice start! Good suggestions for newbies! Posted December 10, 2007 |
