The cost to get into option trading is very reasonable. Also the returns are very good. I am looking for people that have a good track record. Not looking to make a million, just a positive return including my cost to trade. Everybody claims to these fantastic returns until you look at their records. They might make a few good tades and then wipe out the gains with one trade. Know that been there and wiped out the returns of a good year with two bad trades. Looking for some good recommendations of who to look at.
Please do not let this post dissuade you from wanting to trade options, but before you start trading anything I suggest you have some form of technical analysis to use before you enter and exit a trade.
Trading options is much more dynamic than stock. There are things that can work in you favor and work against you when trading options. The two biggest are the Delta and Vega. Implied volatility has a big impact on option pricing.
Why does options have such a good return? Well I can buy 1 option contract for $550 dollars on the DIA (mirrors the DOW), 1 contract equals 100 shares, therefore every time the DIA moves 1 dollar, I make 1 dollar, or a little less depending on delta. To buy 100 shares of the DIA would cost $13,900 right now.
So for $550 I can have the same upside potential if I bought a call with a high delta as someone that purchased 100 shares for $13,900, however my max loss on the position is $550, what I paid for the contract.
You can not lose more than what you buy....however if you sell options your downside is unlimited.. this is where people get into trouble with options.
Do yourself a favor, buy only calls or puts, pick market direction, and you will stay out of trouble. Do not sell any options unless you have protection. So don't naked sell any option. If you don't know what that means then just don't sell anything at this point.
I would also stay away from complex spread positions, even credit and debit spreads, iron condors, double calenders, etc, until you really know what you are doing. You end up spending more in commissions. My advice is to keep it simple, play only the indexes that have a highly liquid options, with little spreads, and then go from there.
scose-no-doubt
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May I suggest that you approach the nearest flight school and enquire about lessons. I'm sure they'll be able to tell you everything you need know.
