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I’ve never heard of this until a few days ago. what is options trading btw? how can i do well?

An option is a financial instrument you can buy or sell to generate additional income on the stocks you already own or to speculate on stock price movement.

Here’s how it works:

Before you can trade options, you have to apply for options trading.

Most applications are reviewed and approved within 5 business days.

After being approved, decide whether you want to write a covered call, or trade calls or puts.

Options Strategies

* Covered Calls
Sell a covered call to generate income on a stock position you already own. This strategy is designed for conservative investors who are neutral to moderately bullish on a stock currently owned and are willing to sell the stock at a pre-determined price in exchange for receiving a premium for selling the call option.
* Trading Calls & Puts
Buy calls and puts to speculate on the price of a stock. Investors can buy long call options when they feel the price of the underlying stock will increase, or buy long put options when they feel the price will decrease.

I think I would like to have my next career be as a self employed options trader.

After a 14 year career in the Engineering and IT world I moved last year into a career in finance, specifically as a commercial lending officer for a large credit union ($1.5B.) My education career started in Engineering (including 19 hours of Calculus and linear algebra) but my actual undergrad is a BBA. My IT education includes 4 advanced self taught certifications. I started investing in CD’s, stocks and bonds in 1990, added covered call options in 2000 and long call options in 2005. Even though I had never worked in the finance field, my amateur interest in the financial markets is great enough that senior management asks me my opinion on current issues and trends because of my constant exposure.

As part of my job requirement I will be starting an MBA in September and my course of study is up to me as long as I am working on the graduate degree. Due to my pre-existing interest, heavy coursework in finance, securities and financial math would not be unusual. For political reasons I have to stay in this job for 4 years but I effectively have the opportunity, means and permission to rebuild myself with an eye toward starting on a career in the world of options should I so desire.

I know that during my studies I could ask the professors and advisors about this but I would much rather find someone who is actually doing this to help me structure my courses and studies (formal and self taught) so that while I am being paid to learn I can be learning the things to help me most.

As some here have seen (and answered my questions) I have at least some understanding of options trading. I have found what I think it an effective day trading strategy but it has the significant problems of being unable to scale and requiring constant attention to prevent being on the wrong side of a trend. I need to really learn to do spreads and other long term positions so I can make thousands on a longer term position instead of the $100 per round trip in 15 minutes I target today and not have to watch every minute move from 9:30 to 4:00 all day worrying about missing an instantaneous buying or selling opportunity.

I would very much appreciate it if somebody who has had success in the area of options investing can help me to learn what I need to learn to have the mental tools and experience to be able to seek a career in this arena or barring direct help, help me to find someone who can guide me on this. I don’t think I am asking for a lot of someone’s time but I certainly think it can’t hurt to ask for some help rather than waste money on books or seminars flailing about trying to find that one needle in the haystack of information otherwise uselss to me.

Feel free to contact me directly should you be so inclined.

Thanks in advance for any help provided.

I been trading options for some time, focusing on premium selling. My favorite strategy are credit spread and calendars. Dan Sheridan is a great option mentor. You can watch his videos at the cboe.com

For instance, can I simply trade the contract cost without ever having an obligation to the shares? For instance, let’s say I buy a call contract at $2.50 ($250.00) and the next day the stock rises and the same call contract is worth $2.55 ($255.00). Would I be able to sale the same call contact for the $2.55 with no other obligations even before the expiration? Does it also work that way with put options?
Thank you

<<<can I simply trade the contract cost without ever having an obligation to the shares?>>>

Yes. The only time you have an obligation is when you have written an option (sold an option you do not own).

<<< For instance, let’s say I buy a call contract at $2.50 ($250.00) and the next day the stock rises and the same call contract is worth $2.55 ($255.00). Would I be able to sale the same call contact for the $2.55 with no other obligations even before the expiration?>>>

Yes

<<<Does it also work that way with put options?>>>

Yes

————

One important thing you need to understand is that the price of an option depends upon more than the price of the stock. It is perfectly possible to buy a call option but see the price of the call option go down even though the price of the stock went up. Similarly, it is perfectly possible to buy a put option but see the price of the put option go down even though the price of the stock went down.

What I need to know is, and this needs to be answered with somebody that actually trades options for a living. The other day i was watching this stock in pre market trading it was up by 5 dallars or 5 points in pre market. i wanted to catch that move using options, i have been paper trading with option express. so i purchased deep in the money calls. and the last bid and ask, the price of the option was like 8.20 – 8.50 the last trading day, i put a limit order in for 8.60 before the market opened, i was up tremendous that day because of the price discrepancy. So my anserwer is, is this a flaw with option express, or can you put in a order in using options if you see a stock up or down significantly in pre market trading. to capture the move in within the intraday.

THANK YOU

You are asking a very important question. The fact that you are asking it shows a greater than average understanding of the markets. That said, I’m sorry to have to say that is impossible to answer for sure. Any type of paper trading does have a limitation in that a computer or person is deciding if and when an order gets filled and this might not be totally realistic. When you are ready to move on, start with real money in tiny amounts and watch what happens with real orders getting filled.

Back to your example. Please consider another theory. You didn’t capture the 5 point "discrepancy". You might have been profitable because there was a big follow thru when the primary market opened and you caught some of that move. I have done this, and when it works, it works well, but sometimes there is no follow thru, or worse, there is a backlash, so being ready to exit promptly when the trade is not forming is crucial to success.

http://www.todaytrader.com. Day trading in stocks is both risky and difficult. Please consult your financial advisor before attempting to trade actively. TodayTrader is not responsible for any content that may be viewed on this channel. These videos are not meant to be recommendations in the market. Day trading equities requires a retail account balance of at least $25,000 and must remain at or above this level to trade stocks actively. This website is not a solicitation to buy or sell securities, options, or futures. The purpose of this content is educational only.

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