Options Trading Tutorial

Where can I learn to trade options effectively? Is there good book by someone who is successful at doing it?

Public Comments

1. There are lots of good books. Also, lots of good online tutorials. First of all, you have to be able to judge the underlying company, just the way you would if you were purchasing the stock directly. Secondly, you need to understand the greeks-volatility, time value, premium, etc. You can start with your broker. Companies like Schwab, TD AMeritrade and Scott Trade all have tutorials. You have to be approved to trade options by your broker. Start reading and take some tutorials. Go to the library. Be sure you understand both company fundamentals, and how to read technical charts. You will need both to be successful. Good luck.
2. You can start with some free educational material on the web. I recommend the CBOE Learning Center at http://www.cboe.com/LearnCenter/default.aspx and the OIC education site at http://www.optionseducation.org/ Both sites present a lot of free, quality information with no spam. You can then use the virtual trade tool at http://www.cboe.com/tradtool/virtualtrade.aspx which will let practice with play money. Before trading with real money I suggest you read at least one or two good books about options. Which book is best depends upon you to some degree. I recommend you scan multiple books at a large library, a large bookstore, or at Amazon.com to pick one that you like after going through the on-line material already mentioned. My two favorite books on the subject are "Options as a Strategic Investment" by Lawrence McMillan and "Option Volatility & Pricing" by Sheldon Natenberg. I will mention one other book that I have not read. "The Rookie's Guide to Options" by Mark Wolfinger has one advantage you may not find elsewhere. The author participates in the message board at http://messages.yahoo.com/Business_%26_Finance/Investments/forumview?bn=4686677 posting under the name "dagnyt". You can ask him questions directly if you are unclear about anything in the book. N.B. That message board has several "imposters" so be very careful to double check the name of the person making a post.
3. Yep, there's lots of good books out there, and many of them geared to newbies, which I'd strongly suggest. Additionally, there are several companies that sell seats in seminars. These are usually several thousand dollars and there are as many people that feel they wasted their money as felt it was worthwhile. Among these is a company called Optionetics that offers a guarantee. Though they offer a first class education you need to be well aware of the terms of the guarantee before you sign on the dotted line. It is nearly impossible for a newbie to live up to the terms of the guarantee, read your fine print. I've reviewed several of these and many are good, very educational but you need to be very serious about options trading before you venture down that road. Options trading can be very lucrative, but also very complicated and you have to be extremely disciplined to be successful.
4. Yes, The Motley Fool has a guide. www.thefool.com