I want to start trading options, but need to learn first?

Question

Which books should I read?
Is there a mentor that can teach me?
I really want to master options trading. Help me please!

Answer 1

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Start at the CBOE Learning Center at

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

and go through their free tutorials, classes and webcasts. After that read one or two good books about options trading. If you stick with books in the bibliography at

http://www.cboe.com/Institutional/Bibliography.aspx

you will know they are good books. My favorites are are "Options as a Strategic Investment" by Lawrence McMillon and "Options Volatility & Pricing" by Sheldon Natenberg but I recommend you browse different books at a large library, a large book store, or at amazon.com to find books written is a syle that is right for you.

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There are paid mentors available, such as

http://www.sheridanmentoring.com/index.cfm

but, in my opinion, they charge a lot of money to teach you what you could learn on your own from books.

You can ask questions, at no cost, on message boards such as

http://messages.yahoo.com/Business_%26_Finance/Investments/forumview?bn=4686677

where at least a couple options professionals contribute at times.

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In general I think you will find more people are more willing to help you if you make an effort to help yourself first by taking classes and reading books.

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Although you really didn't ask, the previous answers dealt with the risk associated with options trading. One of the things I find most attractive about options is that you can control the amount of risk you take. If you want to try to get rich quick, you can: Just understand that trying to get rich quick is very risky and it is easy to lose a lot of money in the attempt. On the other hand, you can reduce the risk associated with trading stocks and/or futures, although doing so will usually reduce your total return if you are a good trader.

Answer 2

I must agree with #1 and disagree with #2. Here is my own rationale: If you haven't traded stocks, or anything for that matter, then you don't know the fundamentals about markets in general. You need to know them because you have to understand the underlying dynamic of the market, not just the security you would be taking an option on.
Next, and in tandem with understanding the market dynamics, you need to understand the industry dynamics and then the underlying stock. Yes, all 3 should be aligned to push the odds in your favor as much as possible( this dynamic can be positive or negative). Only then go after the option and there are a lot of different strategies to pick from.
So, yes read a couple of books or even take some courses, but do remember, this is more like gambling than investing and it may better suit you to start with share trading and working your way up to options.

Answer 3

I disagree with the above answer. I only trade options and I've made over 6 figures this year. I've been trading for 3 years. I never read any books. I watch medical stocks only. Check out everything about company finance, product line etc. I am a shorty and a long. Options are only risky if you don't do your homework. Never trade options without aquiring powertrade (level 2 trading). I'm sure there are some great books out there but I would look into an option seminar.

Answer 4

If you are thinking of "fast money", then options are NOT what you want. Options are leverage vehicles, which means you can lose many times your investment - way more than you put in ( if you sell options ) If you confine yourself to buying options, then your max loss is the entire investment, but not more than that. If you really want to be successful, take plenty of time to learn all about it; the previous answers give good websites from which to gather material. Then do some "virtual" trading on paper, to get the feel of it before you use real money.

Answer 5

This is one of the riskiest forms of trading there is. Ask yourself if you have the money to lose. If the answer is yes, ask how much. Be prepared. Once you start trading, the temptation to borrow to add to or cover positions will be very strong. This is how people get in trouble. But on to the remainder of your question. There are probably a dozen perfectly good books on options trading.....you will find them in the business section at Barnes and Noble, for example, or do a search on Amazon in the book section. Choose one of the shorter ones. I seem to remember one called, "How to make money in options" or something like that but frankly, none of these stay in print all that long. If it really matters, write me privately and I will dig up the two books I used....I can't recall their exact titles right here. DO use a broker to do your trading. Not every brokerage house has what I would call a bevy of experts in options work...call around and do your homework. One of the key questions is how many years they have been doing this and how many clients they have. Brokers are required to divulge their investing "track record" if you ask, and if they resist.....move on.

Answer 6

the best trading software http://tradingsolution.info
i have attended a lot of seminars, read counless books on forex trading and it all cost me thousands of dollars. the worst thing was i blew up my first account. after that i opened another account and the same thing happened again. i started to wonder why i couldn,t make any money in forex trading. at first i thought i knew everything about trading. finally i found that the main problem i have was i did not have the right mental in trading. as we know that psychology has great impact on our trading result. apart from psychology issue, there is another problem that we have to address. they are money management, market analysis, and entry/exit rules. to me money management is important in trading. i opened another account and start to trade profitably after i learnt from my past mistake. i don't trade emotionally anymore.
if you are serious about trading you need to address your weakness and try to fix it. no forex guru can make you Professional trader unless you want to learn from your mistake.

Answer 7

Read what established universities teach - check the books taught at Columbia University, Chicago, etc.
If you have not had prior experience with stocks, go for that first, then consider options.

Answer 8

pick another field