Interested in Options Trading: Where to begin?

evilk9 said:

Hey guys,

Just curious if anyone could point me in the right direction for learning options trading? Essential books etc....
Also how much did you guys start trading on?

Would $5000 be enough to start with?

Click to expand...

evilk9 said:

Hey guys,

Just curious if anyone could point me in the right direction for learning options trading? Essential books etc....
Also how much did you guys start trading on?

Would $5000 be enough to start with?

Click to expand...

hhse said:

Hi,

Google tastytrade, they are an awesome resource that helps you understand options from beginners through to more advanced trades. Good segments are: know your options, market measure, tasty bites etc... you can check out others.

I'd suggest U.S markets only because market is more liquid. $5,000 is okay but margin wise, you should only be using ~ $2,000 and less, and these should be at least 5 different trades - with this account, you should focus on debit/credit spreads, iron condors or naked puts on cheaper stocks.

Don't buy a call or a put by itself, you will more likely go broke than profit.

GL

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rimtas said:

$5000 is too much. Reduce account to $1000 for a start.
Options trading is not a rocket science. It is the same as trading stocks or other instruments-you need to correctly forecast the direction. Just for the options besides the direction you must forecast a time factor as well, and the volatility of the movement(how strong it could be, will it have a sideways movement within and when).
Cheapest options are at the end of the correction, most expensive-when volatility index is high.

I recommend not to touch OTM (out of market) options, and start trading with closer ATM. Also, do dot sell options if you do not understand risks, as this could result in being at a big debt to your broker.

The best instrument for this is SPY, QQQ where liquidity is very high and thus spreads are extremely low, allowing you to make(or loose) 20-30% daily(if daytrading). Interactive Brokers charged $4 per contract for commission when I was trading with them, maybe someone can recommend other brokers if you would like to try ASX market.

But if you are new to this, prepare to loose money constantly. It only looks that profits can be big and fast, but in reality to achieve this you must be a professional in forecasting the direction, time and volatility of the underlying security which options you intend to trade. Small amounts, for fun, for new knowledge-yes, it is worth. All experience counts. It helps to know yourself better.

Good luck.

Click to expand...

rimtas said:

$5000 is too much. Reduce account to $1000 for a start.
Options trading is not a rocket science. It is the same as trading stocks or other instruments-you need to correctly forecast the direction. Just for the options besides the direction you must forecast a time factor as well, and the volatility of the movement(how strong it could be, will it have a sideways movement within and when).
Cheapest options are at the end of the correction, most expensive-when volatility index is high.

I recommend not to touch OTM (out of market) options, and start trading with closer ATM. Also, do dot sell options if you do not understand risks, as this could result in being at a big debt to your broker.

The best instrument for this is SPY, QQQ where liquidity is very high and thus spreads are extremely low, allowing you to make(or loose) 20-30% daily(if daytrading). Interactive Brokers charged $4 per contract for commission when I was trading with them, maybe someone can recommend other brokers if you would like to try ASX market.

But if you are new to this, prepare to loose money constantly. It only looks that profits can be big and fast, but in reality to achieve this you must be a professional in forecasting the direction, time and volatility of the underlying security which options you intend to trade. Small amounts, for fun, for new knowledge-yes, it is worth. All experience counts. It helps to know yourself better.

Good luck.

Click to expand...