How to Trade Options
Do you want to learn how to trade options? I have simplified the process in 7 easy to follow steps. What you need to do is not over-complicate the process, then you’ll be well on your way to trading options in no time!
Understand Options Trading Basics
- know the difference between a call and a put
- understand your rights/obligations as a buyer/seller of each.
Note: Visit options trading facts and obtain the FREE 17 page report available which will give you this understanding. Make sure you read through the report in its entirety. This may mean you will have to read it several times! When learning how to trade options ensure you understand these two important steps:
- If the stock price increases then CALL option prices increase
- If the stock price falls then PUT option prices increase
Furthermore the following concepts will need to be revised
- If you buy a call option you have the right to buy the underlying security / stock at the option strike price.
- If you sell a call option – you are selling the right to buy the underlying security / stock at the option strike price.
- If you buy a put option – you are purchasing the right to sell the underlying security / stock at the option strike price.
- If you sell a put option – you are selling the right to sell the underlying security at the option strike price.
Learn an option trading strategy
Now is the time to become educated. There are lots of strategies however I would begin slowly options trading in Australia on the ASX – Australian Equity Options. To begin your journey understanding a strategy there are many courses available however before you part with hard earned cash on your education read the report online options trading reviewed
When choosing your education select a company with a good support program and experienced traders.
Choose a stock broker
You will find good online brokers relatively easy. Make sure you look for a broker who understands how to trade options, that has good prices. It’s also nice to know your broker can take orders over the phone (as a safety net if your internet goes down).
Paper trade your strategy.
With your knowledge, strategy and broker in place, it’s time to start paper trading (i.e. practice trading with numbers, but not real money). When paper trading a new system, it’s very important to execute every single trade as if it were real.
Now its time to move to live trading
Now it’s time for the excitement! Always start small… just a couple of contracts will do. Most times one or two contracts will only break even of maybe bring you a small loss after brokerage, but that doesn’t matter. Count it as a small education expense. The idea is to experience entering a real order in your trading platform. Once you have paper-traded for 9-12 weeks and you know your strategy creates profits, then by all means place full sized trades… and watch your bank account grow!
Check out my website, where you’ll see exactly how to trade options. Get ready to start creating the income and lifestyle you desire!
Thanks
Anthony Manly
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