How can I quickly learn about stock options?

Question

I want to make an option trade but I need to understand how they work a little more. I just need to ABCs

Answer 1

You have a couple of choices.

If you really want to learn about them QUICKLY, and you don't want to lose money, find yourself a successful options trader, ask them to be your mentor and watch what he/she does for a few weeks. You'll learn about strategy, you'll learn about timing, you'll learn about research, and you'll learn how to successfully apply them all in real situations.

If this doesn't work, you need focus on one or two strategies and learn all you can about those. To start, I'd stick with either buying calls, buy puts, or selling covered calls. I'd use the online tutorials at CBOE.com or poke around 888options.com to try to understand what the strategy is, its appropriate use, and how to choose an underlying stock, an appropriate strike price, and a expiration date. Once you feel comfortable, papertrade for a few weeks/months to make sure really have it down. (You can open an account at OptionsXpress.com and do virtual trading without having to fund the account.) Once you've got one or two strategies down, then you can start learning another.

If you don't like either of those possibilities, place a bet and hope you don't lose all of your money!

Answer 2

Trading options requires more than just learning the ABC's.
Many that learn the ABC's are still not equipped to trade real money. They go several months paper trading (virtual trading) before they understand the nature of the market.
When trading options there are so many things going on at the same time that you need to be aware of.
There are also numerous strategies to apply based on the market trends, earnings, fed announcements, splits, and so on.
Options Made easy is the program I use. They had workshops, audio, video, and reading material to learn the world of options trading. They also have ongoing support and coaching which is vital to successful trading.

Good luck!

Answer 3

I agree with pxp608 that your should learn more than the ABCs before trying to trade options.

The ABCs can be learned at

http://www.cboe.com/LearnCenter/default.aspx

After going through the lessons there I suggest you read at least one or two good books on options. Two books I recommend you consider are "Options as a Strategic Investment" by Lawrence McMillon and "Options Volatility & Pricing" by Sheldon Natenberg.

Answer 4

come to accept the fact you will lose your first 3,000$ invested in options...

write out what you will buy and why... buy it... have the opposite occur.. lose everything

evaluate what happened and learn from it...

what you read about options will get you started .. but they are very complex and risky.... best way to learn is to jump right in...
otherwise you're in for a long learning curve to get it right... people will tell you its easy... buy a call for a stock that goes up... but in reality is more complex than that if your goal is to make money...

here's a short (113 page booklet .. "the Characteristics and Risks of options")
http://www.optionsclearing.com/publications/risks/riskstoc.pdf

good luck