2007-07-19 07:09:57 · 6 answers · asked by myup4 1 in Business & Finance ➔ Investing
The only secret is that there are no secrets in trading options. (Don't tell anyone. Those guys who charge thousands of dollars to tell you the secrets wouldn't like it.)
The primary key to success to learn what you are doing before trading. There is plenty of free information about option trading on the web, such as
http://www.cboe.com/LearnCenter/default.aspx ,
which give you a good start, but you really need to read at least one good book on options as well. Two books I recommend you consider are "Options as a Strategic Investment" by Lawrence McMillon and "Options Volatility & Pricing" by Sheldon Natenberg.
As well as understanding options, money management and risk management are critical to success trading options. If you are not sure what I mean, or how to do it, you should concentrate on more education before trading.
2007-07-19 10:06:22 · answer #1 · answered by zman492 7 · 0⤊ 1⤋
Sell options on stock you own. Way less risky (at worst you sell your stock to someone else at a price above where its trading now) and more often than not (most options expire worthless) people will simply be giving you money for nothing.
If you do want to buy calls/shorts, buy options that are a few years away from expiration. The more time a stock has to pop, the more likely that it will. Also if you're just starting out, don't toss your life savings into an options trade.
2007-07-19 08:29:36 · answer #2 · answered by Adam J 6 · 0⤊ 0⤋
There are two keys to options. The conservative play is to sell covered calls on the stock you own, and sell puts only for stock that you want to buy anyway. That works pretty well to add a little boost to your portfolio. I buy some puts and calls when I'm ALMOST certain about the movement of a stock.
Lenny Dykstra has a good method for options. Here's the link.
http://find.thestreet.com/cgi-bin/texis/author/?au=A1100645
2007-07-19 07:56:21 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Stay away from excesive leverage.
Beware of time decay.
Do some big-picture analysis
Never trade against the main trend
Have a life, otherwise you'll end up overtrading.
2007-07-19 08:20:19 · answer #4 · answered by Carlos G 3 · 0⤊ 0⤋
You have to really know what your doing to trade options, I would stay away from it unless you have extensive experience with stock trading it is just way to risky.
2007-07-19 07:21:09 · answer #5 · answered by Jeff M 3 · 1⤊ 0⤋
Only the professionals are successful.
2007-07-19 07:13:29 · answer #6 · answered by Andy 3 · 0⤊ 0⤋