If you’re new in the options trading and just got finished with familiarizing with the idea, you might probably be thinking about option trading strategies. Even you have all the basic ideas about options trading, you will need a good strategy to make this work for you.
Before you start your trade on option, you must figure out a strategy. Simplest strategy is still a long call option. Which is just buying a single call option. But it is only one among many other option trading strategies. Some of them are far more complex, incorporating buying and selling many options, both put and call. In general, they can be grouped into three types. One being bullish. This believes the market rates will rise. The next is bearish. This believes the market rates will fall. And the last being neutral, believing the market rates may not change.
Please read the following
As it is said earlier, option trading strategies can be complex and incorporate buying of multiple put and call options. These may increase the risk of profit or reduce the amount of maximum risk. They can all end on same days or different days. Have same strike price or different ones. It all relies on the market knowledge of the buyer and their future plan.
Options basic trading knowledge
An example can demonstrate how a good strategy can be useful in options trading. Say, you have bought a call option and a put option both of a stock at a strike price of $100. If the price of the options are $5 each, your overall cost of the option is $10. Now, if the price of the stock increases up to $120, you can exercise the call option and your net gain would be $120-$10-$100 = $10. But if the price falls below $80 then you can purchase the stock directly at $80 and exercise the put option. In that case also, your gain would be $100-$80-$10 = $10. So, if the market moves either way, you can gain from this strategy. Only way you’ll lose if the market does not change, in that case your risk would be restricted to the only $10.
Option trading and day trading for beginners. ?I'm 16 and looking to learn about day trading and option trading. I'm looking for a book that goes through the basics of day trading and option trading and gives me the base knowledge to begin trading and would provide a jumping off point so to speak by providing basic knowledge which would enable me to understand more advanced methods of day trading. Can anyone recommend me a book, or more than one books that I should begin with? Much appreciated! Also if there are any professional day traders here that I could get in contact with to ask some questions about day trading or purpose get some short tips and lessons. If you have time for this feel free to email me at JacksonAK92@hotmail.com Thanks again. Please for the love of god don't recommend "day trading for kids" or anything like that. I'm young but I'm not stupid and I don't think such books would be helpful to me.
The Compleat Guide To Day Trading Stocks Written by Jake Bernstein The Day Trader's Survival Guide Written by Christopher A. Farrell Good websites: www.optiontradingpedia.com www.sec.gov/answers/options.htm www.optionseducation.org www.optionetics.com
As for books about options I'd suggest two and suggest that you read them in the order mentioned. First, start with "Options as a Strategic Investment". It will cover the basics of options, uses, option spreads and combinations and it covers options on individual equities as well as indexes. Second, "Option Volatility and Pricing" by Sheldon Natenberg is the bible for beginning proprietary option traders. It will give you the depth of information necessary to be a serious trader. Good luck.
If you have wishes to lose huge amounts of money go for it. I day trade every now and then and I used to with ptions. Not anymore though. There's juat too much premium priced in the options now with the vix being so high.
You said – "Please for the love of god don't recommend "day trading for kids" or anything like that. I'm young but I'm not stupid and I don't think such books would be helpful to me." Well the first thing you have to get past is your resistance to learning. I can learn from almost anything, even if it is just a review of fundamentals and one new nugget. Asking for help and then telling people how to help you and what you will not read seems to me like you would be a difficult student. The best traders don't let their preconcieved notions interfere with their trading or learning. Trading is counter-intuitive. FWIW, I use options a bit, but they do not suit my personality as a short term trading vehicle. I prefer simple directional trades. Stocks are okay, but you need some significant capital to make money and shorting can be a problem. Forex has its own issues. I mostly trade futures on a daily basis.
This is the worst time to even think about messing about with the stock markets. Professional stock brokers are losing a fortune what makes you think you can out perform them. Reading books alone is not enough you need experience and a constant source of up to date information in order to make the right decisions. Good luck!
You won't find a book "day trading for kids" because you must be at least 18 or older to open a brokerage account. To tell you the truth if all you know is stock market basics you would wish they had a book called "Day & Option Trading for Kids." Read "The characteristics and risks of standardized options" should be free.
A very basic of the option trading strategies is to buy options that are greatly under-priced. In this way, the window of profit increases and the maximum risk amount decreases. Another very important key is the cognition of what going on in the market. It can enable you to find a job in which the market moves to direction you want. It isn’t as simple as it sounds, it depends on a thousand factors which can go wrong, but it is a prerequisite to do successful trading.
There are among the best options of trading services that suit to all individuals. These options would assist investors and stock marketing players to understand the features and capabilities of trading services. Such options are also essential to remember because success or failure in option trading much depends on the decision made by the investors. So option trading services would help to respond to a fast and of course wise step on investments.
The option services are helpful for all whether it is big investor, small investor or just a beginner. These options involve various types of services such as watch lists, trading calculators, reports, investment calculators, and other market responses. One can easily subscribe these services for making smart as well as wise trading decisions. Nowadays, it is shown that many investors incorrectly speculate the outcome of stock market trading, but in rush of making quick profit sometimes they make wrong decisions.
Sometimes, when market is rising well, every investor feels its easy to learn day trading and becomes a stock analyst, but when market slumps they simply make a notion that markets drop faster than they surge. In such a situation, option services can offer a profitable opportunity, irrelevant to the status of market. It works like a derivative instrument for all those with little knowledge about stock trading options. Such information would help traders to learn day trading and know when to sell a stock at a specific price and at a specific time. Option trading services involve two basic tools such as calls and puts. When you feel bullish about a certain stock, index, or sector, you bought a call because you expect it to go up in value. On the other hand, when you’re not optimistic about a particular stock, index, or sector you buy a put because you expect its value would decline.
Investors are open to know the option trading from several tutorials and online stock trading consultancy. There you can also learn the trade fundamental information on the basis of stock research, purchasing timing, diversification of investments, and arrangement of trading capital. So make a right decision that ensures more profit at the least cost.
So, it is a good idea to learn more about various option trading strategies and applying a good strategy for option trading business. You can consult various licensed firms and consultants to get good advice, for this.