Options Trading Tutorial

Is there a recommended amount for starting out w/ options?

I've been doing a lot of reserach on (call options). But it seems pretty pointless to waste $500-$1000 to only gain maybe $20-$100. Then you have to take in account for broker fee's,contract fee's,trade fee's. Is there an idea amount that one should have before purchasing options. If anyone knows of a good website where I can continue to educate myself on options, it would be helpful.

Public Comments

1. Right now options are a real crap shoot. I'd look at the commodities market if you want to start investing. It's always done well in times of economic uncertainty.
2. It really depends on how you trade options. I trade it because of the buying power and leverage. And it really depends on what strategy you use. You can absolutely start with $1000 and easily double it, if not more. Even if you get $100, that's still a 10% return, which is realistically achievable. But, it has to be done correctly. Here's a couple of free sites to check out for options education. http://biz.yahoo.com/opt/ http://www.tplinvestment.com I recommend $5000 to get started. To really learn options, I suggest either picking up some books, or better yet, attend some seminars. Options is not easy, but is definitely worth it.
3. Fantasy Trade for a while before you start with real money. All you need to be in a good option trading environment is volatility and I do believe we have that right now. Stay away from the commodities - you can lose more than your initial investment. That's for the big boys
4. Keep in mind that options exaggerate or leverage the movements of stock prices. So, if you are a really good stock trader, you can magnify the results of your efforts. But, if you aren't well skilled and experienced at trading stocks, you are destined to lose your money trading options. Going first to options would be like competing in a Triathalon before learning to swim bike or run. I knew of a stock broker who specialized in options trading. He had to change his specialty because his clients kept running out of money. A few pros make money and most small amateurs surrender their money to the pros.
5. <<<Is there a recommended amount for starting out w/ options?>>> Years ago someone asked Lawrence McMillan (one of the best known options professional trader, author and educator) if $20,000 was enough to start trading options. His answer was that $20,000 was not enough. You can, or course, start with less. If you do you certainly want to limit the strategies you utilize. <<<Is there an idea amount that one should have before purchasing options.>>> Enough that a 100% loss on your option trades will not have a material impact on your financial well being. <<<If anyone knows of a good website where I can continue to educate myself on options, it would be helpful.>>> Almost certainly the best websites for options education are http://www.optionseducation.org/ and http://www.cboe.com/LearnCenter/default.aspx Even though I believe these are the best, I believe you will have a much better chance of success if you also read at least one good book on options trading as well as going through the websites.