Do NOT make a post asking for advice, that belongs as a comment in the "Daily advice thread". Keep discussions civil, informative and polite. Off topic comments, attacks or insults will not be tolerated.
Strictly no promotional threads. Do not post your app, tool, blog, event, etc. A hedge fund analyst explains his stock research process. Full of excellent links to videos, articles, and books. Any good place to learn Options Trading?
I have been trading stocks for the last six years and have lately done good. I have no idea how to even start with Options trading. No clue at all besides two terms Calls and Puts which I don't know what they mean.
I am just wondering if there is any online trading place that offers any courses to learn options trading. I was in your shoes about a year ago. I started with dough and I highly recommend it. Incredibly informative and easy to follow. Yeah I've actually never used their platform to trade. I used the learn section and watched all their videos in order. One of the benefits of opening an account with Dough the actual account is with TD is the special commission rates you can get through them.
I think it's like 1. If I had to do it all over again I would definitely use Dough. That would probably have saved me a lot of time and aggravation haha. I'm a big fan of learning by doing -- I'd paper trade and screw around with tons of options trades and see how they play out.
Remember with options that they are not for trading direction -- they're first and foremost for trading volatility. The beauty of options is you can be wrong about the direction of an underlying and still make money.
Thankfully this is the case or awful stock pickers like myself would be out of luck. I am very new to Options. Can you please expand on "The beauty of options is you can be wrong about the direction of an underlying and still make money. Here's a classic example.
Remember that volatility is essentially uncertainty. When uncertainty is removed, the value of an option will go down and vice versa. Let's say I own a call in XYZ at a bullish position. We will say I paid one dollar for it. You're excited; you are long the underlying and can't wait for the market to open the next day. You were right about direction but wrong about volatility so you lost money any way.
It also comes in when you sell options. Your trading platform will usually tell you what your breakeven price is on the underlying before you start losing money. If it doesn't, it's easily calculated by hand. He just means if you write a put and the underlying goes down but not down enough to outpace theta decay or IV expansion then you profit. Same with writing calls but going up. Basically selling an OTM put you win if the underlying goes up, does nothing, or moves slightly down.
Think he means more something along the lines of a straddle. A straddle still doesn't click with the idea of being wrong about the underlying though. You still have to predict there will be a significant movement either up or down.
If the price stays the same meaning you were wrong about the direction , you've lost money to the tune of two expired options. Options become more expensive when Vol is high. When Vol is above historical norms, writing aka, selling contracts can be very profitable because you get a larger upfront premium. As vol drops, the contract loses value, and you can buy it back at a cheaper price for a tidy profit.
I don't think anyone here is talking about non-american options. If you really want to get into it you could break it down for every type - binary, bermudan, etc. It's just not relevant to this discussion. While they can are routinely used to trade volatility, they are also used to trade direction of stocks. Setting up volatility trades, which can involve setting up multiple offsetting option trades, is a more advanced concept that you can tackle once you better understand the basic call and put option dynamics.
Look at implied volatilities before you put on any position. You shouldn't be putting on a position just for the hell of it -- you should be selling higher vols and buying lower vols. This is me after becoming comfortable with traditional stock trading.
The few "big" mistakes I've made I chalk up to the cost of the education. For an option to be "In the Money", the underlying stock price must go up for any Call, and go down for any Put. Call up, Put down. You always "Buy" for insurance and you "Sell" for income. Buying a Call or Put will provide insurance. Selling a Call or Put will provide you with the premiums for income. You buy Spreads because you're bearish or bullish.
You buy Straddles to protect against volatility in either direction buying insurance or you Sell Straddles hoping market doesn't move and you collect premium Sell for income. You should check it out. But it doesn't allow you to write options i. If you can't do that you can't make spreads.
Have used it and the fee structure is weird and not accurate. Also since you can't write options you can't test any real option strategy that would limit your risk, i.
Do the exact opposite of what the forum is telling you, and let me know when you're a millionaire. I like this book: Unlock the Opportunities and Minimize the Risks" by Olmstead.
Anyhow I completely switched from stocks to options. Playing with small amounts of money in high risk instrument for short periods feels much better to me personally than putting all my money in stocks and index funds which are also exposed to massive market corrections. I've also found it easier to make profits. After checking out dough. Prizes too, but the main part is to educate and see how people trade. A few I like Dough. You might want to check out TraderMinute.
The options education council is the place to learn options. I forget the website so google that term. Option trading is far superior to stock trading. Options are not hard to understand though they may seem daunting at first.
You want to be a seller of options via Option spreads Selling a put and buying a lower strike put or selling a call and buying a higher strike call. Once you've learned option basics I would recommend looking at a website called tastytrade. Thinkorswim has a paper trading module that will let you trade options or futures or whatever, but the software is a little complex to navigate. I would start with just buying ATM calls or puts, or better yet sell covered calls if you have the position sizes to do it.
This has been asked and answered many times in the past. Use the search function or check out this , this , this , this , this or this thread.
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