Trading stock options offers the chance to profit handsomely as options can control up to shares of stock per option while the risk is limited to just the cost of the option. Few trading instruments can offer that kind of leverage with limited risk, yet most aspiring option traders fail to profit because they don't know how to trade options like a business. Once you implement a few steps, you're on your way to trading like a professional.
Find an experienced option broker by scanning the Internet and conducting interviews. Ask how long the broker has been dealing in options. Ask several questions such as "Have you ever traded options before?
Spend time learning their different features and how to use them proficiently. Open a option trading account with an experienced brokerage. Set up your price charts to track the underlying stock on at least one of your price charts while having a separate screen for the stock symbols. Also, have a separate screen for option quotes on the stock you are tracking.
Some trading platforms will let you link all the screens together so that as you click through the different stock symbols it will automatically pull up the price chart as well as the option quotes.
Write out a sound trading plan that details your trading approach and a sound money management method. A solid trading plan will detail the type of trades you will take, the type of trades you will not take, trade management, and risk control.
WIth over 2 decades of experience in banking, real estate, business development, sales, and trading the stock market as well as having been published in "Futures Magazine. Skip to main content. Tip Spend the most time detailing your trading plan. This is your "business plan" if you want to learn how to trade options like a business.
This is the cornerstone that you will build your option trading career on if you take the time to detail it the right way. Warning Most aspiring option traders fail to write out a detailed trading plan and typically fail at trading stock options successfully.
Or worse, they fail to complete it in its entirety by failing to detail a proper money management method in its outline.
Risk control and timing of your trades are going to be the most important rules you want to include in your trading plan to learn how to trade options like a business and trade profitably. A Profitable Option for Option Trading. Suggest an Article Correction.More...