how to trade stock options for beginners

35
HOW TO TRADE STOCK OPTIONS FOR BEGINNERS By www.Options-Trading-Education.com

Upload: investingtips

Post on 26-Jan-2017

56 views

Category:

News & Politics


1 download

TRANSCRIPT

Page 1: How to Trade Stock Options for Beginners

HOW TO TRADE STOCK OPTIONS FOR BEGINNERSBy www.Options-Trading-Education.com

Page 2: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Options trading can be a profitable way to trade stocks and a way to limit losses as well.

Page 3: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Options trading provides traders with a means of leveraging a small trading account into large gains.

Page 4: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Before We Continue…Click the links below to get your

FREE training materials.

Free Weekly Investing WebinarsDon’t miss these free training events!

http://www.profitableinvestingtips.com/free-webinar

Forex Conspiracy ReportRead every word of this report!

http://www.forexconspiracyreport.com

Get 12 Free Japanese Candlestick VideosIncludes training for all 12 major candlestick signals.

http://www.candlestickforums.com

Page 5: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

But in order gain profits in options trading you need to learn the basics, practice in simulation trading and then start with your own money.

Page 6: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

This article is about how to trade stock options for beginners.

Page 8: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Stock options are traded with calls and puts. What are call options?

Page 9: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

In stock trading these are contracts giving the buyer the right to purchase 100 shares of stock per contract.

Page 10: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The trader pays a premium to purchase the options contract.

Page 11: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

He then has the right to buy stock but is under no obligation to do so.

Page 12: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The trader will analyze the fundamentals of a stock and do technical analysis of stock price patterns seeking to predict price movement.

Page 13: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

When he believes that a stock will go up in value he can do a number of things.

Page 14: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

He can just buy the stock. But then, if the price goes down he has lost money, maybe a lot if the fall is precipitous.

Page 15: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

He has also tied up a fair amount of capital in the transaction.

Page 16: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

An alternative is to buy call options.

Page 17: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The buyer of a call contract limits his potential losses to the premium he pays for the call contract.

Page 18: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The seller makes money by selling the contract but assumes the risk of a huge loss if the trade goes against him.

Page 20: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

A put contract confers an obligation on the seller (writer) of the put option to buy the underlying equity if the buyer executes the contract.

Page 21: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

As with calls the buyer pays a premium and the seller collects.

Page 22: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The buy is under no obligation to execute the put and will do so only if the stock price falls.

Page 23: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

He limits his potential losses to the cost of the premium he pays.

Page 24: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

The seller gets paid for assuming a potentially large risk of loss.

Page 25: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Practice Makes Perfect

Page 26: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Options trading is a business. Successful options traders learn to analyze stocks for both short term and longer term price movement.

Page 27: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Then they trade accordingly. The technical analysis of options is applied to short term price movement.

Page 28: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Traders analyze price, trading volume, open interest and price patterns.

Page 29: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Serious traders use a trade station with statistical analysis software and the ability to display a lot of useful information all at once.

Page 30: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Think of working at a trade station like performance art.

Page 31: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

You need to practice and practice until all of the necessary steps are second nature.

Page 32: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Traders commonly use simulation trading programs that have real data from past months and years.

Page 33: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

How to trade stock options for beginners is to start in simulation trading until you are proficient with the tools you need.

Page 34: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Then, and only then, should you start trading with your own money.

Page 35: How to Trade Stock Options for Beginners

http://www.options-trading-education.com/24434/how-to-trade-stock-options-for-beginners/

Another useful step is to sign on with a trading coach for the first few months and follow his or her trades until you are totally comfortable making your own choices.