This section will provide you with the necessary tools to grasp a wide range of topics surrounding options trading. Whether you are a beginner or advanced trader, you will learn new techniques and trading methods to keep your portfolio net positive.
Learn the basic ideas behind trading options including calls, puts, and the differences between buying and writing options. Although the topics are simple, they are essential to know before trading any option contract.
Explore in-depth option principles with a focus on premium and the greeks. These are methods of pricing options and can help you when determining exactly which contract to pick. Each greek has an effect on the price of the option, and you must consider each one before purchasing or writing an option.
Learning how to use spreads effectively will be highly rewarding in the long run. Spreads are an essential tool to advancing your trading career and can help you ensure profits while also limiting risk.
This strategy involves buying one option and writing another one with the same expiration date, but with different strike prices. Although it limits profit potential, it increases probability of profit and allows you to open a position with less capital at risk.
Congratulations on reaching part 5 of our Options Guide! Options are a fantastic way to capitalize on volatility in the market, and this section goes over Straddles and Strangles, two ways to profit off of volatility. Additionally, you learn about the ATM Straddle Strategy which is incredibly useful especially during earnings season!
Now that you know most strategies that involve purchasing options, we can dive into the world of writing options beginning with the classic Credit Spread. This is the simplest method of writing options, and its versatile characteristics can significantly improve your win rate especially in times where IV is higher than normal. However, losses can be very large so you must carefully pick your contracts and follow a solid risk management plan before using credit spreads with real money.