Feed: Understanding Options Trading - AggScore: 14.0

Understanding Options Trading

---

Understanding Options Trading

It is very important to have a solid understanding of the basics of options before starting to trade them. There is a widely stated statistic that 90% of options traders lose money but I think that it is mostly because people decide to buy options as a "cheap" alternative to buying shares of stock and don't know what they are doing. Options are a very powerful tool to making money in investing and with the information and technology that is available to the average independent investor now, you can be successful with options with the right foundation. Below is what I have found to be the best information for developing a solid foundation for getting started. I realize there are hundreds of options seminars and gurus and courses that are thousands of dollars but honestly you can develop a strong understanding of options with minimal budget. Here is a list of resources for learning and understanding options trading:

• Chicago Board of Options (CBOE) website for free webinars and tutorials. Go to the Education tab in the site and sign up for free. I would watch everything from Dan Sheridan. You can use COBE to understand the basics of options.
• ThinkorSwim(TOS) Options Brokerage - I personally use TOS for my options trading and their education webinars and tutorials are excellent. You can sign up for free to use their ThinkorSwim trading platform with a papermoney account to practice trade in real time (I think they have the best technology and trading platform for options. I highly recommend watching their archived webinars and I would make sure to watch the ones from Don Kaufman and Dan Sheridan.
• Visit the free archived webinars on other options brokerage sites like Tradeking.com, Trademonster.com, and optionsexpress.
• For the basics, focus on seminars discussing Options Greeks, Options pricing, Understanding volatility and Managing/adjusting trades. Then move onto understanding the various dynamics of the different options trading strategies

For most options traders the strategies they start out with is covered call writing and vertical spreads with calls or puts. The other popular managed risk strategies to understand are double calendars, diagonal spread, and irons condors for income writing. The only options book I bought to use as a reference to various options strategies is called The Bible of Options Strategies, which after reading reviews looked to be the best for a quick reference (some options books are too focused on explaining options pricing models and statistics,etc.. It is a good book and well laid out as a quick reference. The most informative course/program I have bought that really helped put together some of the pieces of how to trade options like a professional would and really provides a solid understanding to options trading is called Trading Pro System. After spending hundreds of hours reading/trading/searching though various options courses,etc.....I still find Trading Pro System to be solid information and a "deal" compared to most options programs which cost a lot more. I wrote a review about it before, see post 1 & post 2 (In fact I recently spent $800 on a weekly options course from another options guru called Preston James and the course is Weekly Options Windfall and I didn't really find it to be that great. The amount of content in Trading Pro System is much more substantial than in Weekly Options Windfall. While its not the exact same content covered I would recommend Trading Pro System as much more essential for those new to options) Hope this post helps and honestly if you follow the steps listed here it will save you a lot of time and money.