People often ask me what the simplest way to become a profitable traders is. I think deep down everyone already knows the answer before they even ask the question, yet they ask anyway perhaps hoping for a different answer.

The truth is, becoming a profitable trader is not simple at all, it takes time, money, hard work and commitment, which many people are simply not willing to give up in exchange for the valuable skills of a profitable trader.

Those who are willing to take the time to learn and nurture these skills are usually rewarded handsomely for it, through both their own trading results, and lending their experience to less knowledgable investors.

So, what is the simplest way to become a profitable options trader? Simple… Team up with somebody who already has the skills you desire, let them help you along the way, and over time you will start to develop your own trading skills and abilities. Nobody can become an overnight success trading any market, but almost anyone can learn to become a profitable trader if they have the commitment to do so.

In my experience almost anyone who is successful has got there through having a coach or mentor to advise and support him or her on their journey. This is because experience is such a great teacher, and leveraging off other peoples experience can enable you to gain a stronger level of confidence and experience far more quickly than if you were doing so alone.

The expression that “nobody needs a friend when they are making money” is so true in markets. It may be true when things are going well; however, when things go wrong you definitely need to have the ability to talk to someone who can assist you in getting back on track. Having a coach or a mentoring program is definitely a way of fast tracking years of study, and getting you to a higher level of success and therefore profitability in markets. Have mentor or a coach who has done and does what you are looking to do, not someone who has simply read a book about it is paramount.

Having real life experience in markets is crucial, and is one of the most undervalued commodities out there when it comes to starting your own particular trading activities. As such, I would strongly recommend sourcing a mentor or a coach who plays at the level you wish to play at and most importantly, listening to them!



By: Paul Davis

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When you feel you understand a bit about the Options Trading Market, and are ready to give it a try, you need to spend a bit of time developing a strategy to guide your investment decision. It is important in doing this to understand the basic difference between a strategic decision and a tactical decision.

Your trading strategy is your overall plan. It is the guide. The tactical decisions are the day by day, or even trade by trade method you use to execute your overall strategy. Do not make your strategy overly restrictive and inflexible. It is also important to not let a small set back turn you from your strategy. When your plan is well thought out, it deserves a fair chance to succeed. It is a good idea to include a time frame in your strategic planning. When the time frame expires, is the time to stop and do a complete evaluation of how well or how poorly your strategy fared.

Let’s look at a sample strategy.

The first consideration is the amount of available investment capital that is going to be allocated to my options trading plan. Since options tend to carry risk, it makes sense to restrict this amount to what is called risk capital. In other words, I am going to only use money that I can afford to lose. My rent money is exempt under this approach, and will not be used no matter how great the temptation. The plan will be to restrict my investment in options to no more than 20% of my total investment capital.

Next, I will consider a specific target investment. In this sample, it will be finding options with the lowest possible cost. My main concern will be the low cost of the option contract regardless of the type of underlying involved. It will not matter either if the contract is a call or a put. My idea will be both to spread my investment over a larger number of contracts, and limit my losses in the case of any individual one failing to reach the strike price. The idea will be that with a smaller price, the potential profit will be larger and my leverage will be maximized.

Last of all, I am going to stick with my plan for a period of six months to give it a fair chance, and after this period, I will subject the whole idea to a very complete analysis to determine how well it succeeded, or failed. To prepare for this evaluation, very detailed and accurate records will be kept for all transactions. My online options trading broker will more than likely have most of those records saved for me, but I will make sure that this is so, and supplement them with any that I might think necessary.

The above is just an example of how a personal investment strategy might be devised and structured. It was flexible and it considered risk reduction. It allowed ample time to give it a fair chance to succeed. It did not overly hamper my day to day, or tactical investment decisions. Most important, it was my own. There are plenty of people and plenty of websites available to give you advice. Everyone will have their own idea of what will work and what will not work. Listen to them as much as you want, but in the end find the strategy that works for you.



By: Casey Yew

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Option as a strategic investment is fast becoming the choice of many. The benefits that option trading offers are many and we shall discuss the same here. Option trading having many benefits it is actually a wonder as to why it was not a sought after means for investment for so long.

1. Option trading is not as risky as it seems if traded wisely. In case of option you do not require as much finance as you would do for stocks. As far as hedge is concerned, option trading seems to be the most reliable of them all. In case of option trading you have an insurance throughout he day, all seven days a week and not until the close of the market.

2. Option is very cost effective. You could be in a similar position as you would have stocks but by putting in much less as investment but the catch is that the investor needs to be careful and select the right call option so as to be in the same position as he would be with stocks. This stock replacement strategy is very cost effective.

3. Option as a strategic investment offers to its investors a high return on its investments. The return investors make on the right selection in option trading is far greater than any stock investment. Option can get you about 60-70% and even more on your investments and in the same scenario your stocks may give you a return of only about 10-15%. But there is a flipside to this. When option give you such high rate of return it is only when you have made the right choice but a wrong selection on the other hand can get you back by the entire 100%. So the returns are good but only when you take calculated risks.

4. Option as a strategic investment provides the investor with multiple options so as to attain their aim. Option offers the investors various alternatives if planned and executed well. An example to quote here would be how a margin would have to be paid if short selling is to be done. At times the margin quoted by the brokers is so high that the investor finds it difficult to go ahead with his plans. Then there are those who do not allow short selling by the investor thus again the investor going back to square one as far as his investment plans are concerned. This puts the investor in the back seat as he is unable to execute his plans and here is where the option trading comes into play. You wouldn’t find any broker who says that the investor cannot purchase puts when the market seems to be falling. This would give the option trader an advantage and he would be able to reap the benefits later.

An option trader can invest in the market not only when it moves up or down, when the prices are almost steady, a trader can also use the time factor where the prices are not moving significantly as a profit making opportunity. Thus it is only the option trader who gets a share in the pie in every kind of market.



By: Wincent Loh

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Option paper trading is a term used to describe the way we may test an option trading system without using real money. There are several major benefits from doing this.

1. You are able to prove to yourself whether the strategy you have chosen or been trained in, is actually, a consistently profitable one. It also permits you the opportunity to tweak and improve the system and see the financial outcomes without any real exposure to risk. This can give you confidence in the system itself.

2. The process of option paper trading “trains” you the way to react to unfavorable market situations. A component of any good options trading system is the assmption that a percentage of trades are going to be losing ones. You need to be psychologically prepared for this. Where a predetermined stop loss is part of your system then you need experience in accepting losing trades before you use your own financial resources.

3. The best options traders tell us that 90 percent of trading success is about psychology. You must have the right state of mind when reaching trading decisions. When you assume the mindset of a gambler, you will feel the pain of gambling losses. It is absolutely essential you tackle your trading with the mindset of a serious entrepreneur. On a daily basis you’ll make business decisions in accordance with strict criteria. You will need to be patient and wait for the right setups and confirmation signals so that you will not make the mistake of attempting to predict the market before it shows you where it’s going.

You will need to practice the way you manage your trading funds and use position sizing in a systematic way so that you don’t risk too much of your money on any one trade. You may need to make some blunders in this area and “feel” the consequences of greed or unwarranted risk. Option paper trading is not just about discovering trading opportunities, but also about learning the self discipline that’s so necessary if you wish to realize success.

Where and how to Paper Trade

Typically the most popular options brokers such as TradeKing, OptionsXpress and ThinkorSwim, include an attractive feature which allows you to paper trade without resorting to real money. They give you a “Paper Trading” tool, where live options prices are applied to live stock prices and you can try out your trading strategies without risking real money. But everything else is real, including trading reports which keep track of all your transactions and brokerage costs, so that you can observe what your profit or loss could have been, had you been trading with your own funds.

You simply add an imaginary sum of money to start with and then carry out your trading plan. This is an ideal way to gain real confidence that you can actually make a living trading options.

One final thought. Option paper trading must be taken seriously for it to be truly effective. A casual approach which neglects to monitor your trades or enters doubtful positions knowing that you can’t really lose, is a dangerous psychology. Trust me, once you graduate to using real money, everything will change at an emotional level … so use it as a serious training ground and you will be rewarded.



By: Owen Trimball

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Looking for a flexible, speculative and highly opportunistic source of investment? Why not partake of in some futures options trading? The root of futures option trading lies in an underlying asset which is the topic of sale or purchase. This asset is a futures contract. Two folks are involved in futures options trading : the purchaser and the seller. A premium is charged by the seller to grant the option to the purchaser. The purchaser can take the following moves in the sale : one ) ‘put option’ which is to exercise the right of sale, and two ) ‘call option’ which is to buy the asset. At the agreed price of the asset or the ‘strike price’, the seller has to sell or purchase. Sometimes, though, the buyer maintains the asset till it expires.

The quantity of leverage offered by futures option dealing is gigantic. Very little investment can end up in large number of underlying stocks. However, it is seriously recommended that only seasoned traders should enter this due to the possiblity of massive losses. If you investigate the stock market well, you would do really well in futures option trading since options are an extension of your understanding in stocks.

Being a stock investor is riskier than being a futures option trader. The stock investor will lose a much bigger amount than a futures options trader when the cost of a selected stock drops. This is because the stock trader will need to pay the amount equal to the cost of the stock while the futures option s trader will lose a smaller amount since said trader has only invested a percentage of the face value of the stock. Another edge of futures option trading is that you can buy ‘put options’ equal to the quantity of your shares. This is an excellent system of preventing a drop in the value of the shares owned by him and this strategy can be called ‘Protective Put’.

To start futures option trading, you need to first make a futures option trading account in the Net. You can then practice ‘call options’ with stocks that tend to increase in price and ‘put options’ with stocks having a downward trend. Not all stocks are available for futures option trading. These are called ‘optionable stocks’. You should always perform all-encompassing research and use the knowledge gained by structuring risk and reward. You should always target for revenue generation instead of enjoying speculations. You must be sure that you have enough money for this business. It is also strongly recommended that you don’t invest your entire savings into futures option trading since you can lose a huge amount in such a short time span. You can just add it to your portfolio and not make it your sole revenue generator. Losses are part of any trade so be prepared for it.



By: DayTrading Templates

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A credit spread is a type of vertical spread. It is a trading strategy in which you are buying an option, call or put, at a certain strike price, and simultaneously selling the same type of option at a different strike price of the same month. The sold strike price must have a higher value thus creating a credit at the time the trade is placed. As time goes on the options premium will depreciate, and as long as the price of the stock does not go past the sold strike price at the end of expiration, you keep the full credit. There are two main ways to trade credit spreads – either a low capital risk trade or a high probability trade.

The low capital risk trade consists of making a trade using in the money (ITM) options or at the money (ATM) options to compose the credit spread. For example a stock trading at $55. You are bearish on this stock feeling that it will fall below $50 and stay there. You create a credit spread using calls called a Bear Call Spread. You would sell an ITM $50 call for $5.75 and then buy an ATM $55 call for $2.00 creating a credit for $3.75. The max value of the spread, the difference between strikes, is $5 (55-50), which makes your max risk is $1.25 (5-3.75). This is the low capital risk your are making $3.75 while risking $1.25 which makes for a 300% rate of return. So a high rate of return a low capital risk, what could be wrong with this trade? The probability of success. The stock needs to be below $50 and stay below $50 at the expiration of the options in order to be a successful trade. You need to be correct in your assessment of the direction of the trade.

The high probability trade consists of making a trade using out of the money (OTM) options to compose the credit. Using the same example of a stock trading at $55 that you are bearish, feeling it will fall and stay below $50, we create a different type of credit spread. To create the credit spread, you would sell an OTM $65 Call for $1.10 and buy an OTM $70 Call for $.50 creating a credit of $.60. The max value is still $5 which makes your risk $4.40, much higher than the previous example. This makes for a high capital risk making only $0.60 while risking $4.40 which makes for a 13% rate of return. The difference however is in the probability of the trade being successful. The stock will need to close below $60 at expiration of the options and since it already is below $60 and you feel the stock is weak and will be going lower. The probability of it gaining 10 points or 18% is unlikely in comparison to the previous low capital risk trade in which the stock is at 55 and has to fall 5 points and stay below $50 for the trade to be successful, which makes this credit spread a high probability of success.

Low capital risk but also a low probability of success for the beginner or a higher capital risk with a high probability of success makes for the two choices for the credit spread trader. The choice depends on the traders personality a more involved trader one that really likes to pay close attention to his trade and can make adjustments when necessary may prefer the low capital risk trade. The trader trading part time or is more conservative in their trades one that likes to place a trade and then just monitor it once daily would be more likely to choose the high probability trade. Which type of trader are you?



By: Dan Beatty

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It’s no secret that currency markets have long been the playground of the rich. Forex markets are routinely exploited by hedge funds, the rich and institutional investors to make massive sums of money..Indeed, currency option markets were the prefferred wealth creation vehicle of George Soros.

To illustrate this point, recently, oil prices skyrocketed. The hope of many hedge funds and investors was a barrel price of $200. Actually, this is exactly what happened, until ‘disaster’ struck and the market collapsed.The main factor in this collapse was failing stock markets brought on by the financial crisis.. Most of these hedge funds had to liquidate their positions in the oil markets in order to cover the losses they had suffered in the stock markets.

Maximise Your Profit Making Opportunities

This is why options trading is a fantastic way of hedging risks while maximising return. For example, when you purchase a stock, you pay the price and take on the risk of price volatility. Howeveer, options contracts give you the right to buy or sell a specific number of shares at a fixed price known as exercise price or strike price at a future date In order to secure this right, you must pay a small premium called an options price. The best thing is that if you decide not to exercise your option, then you lose only this premium (that was paid while purchasing the options contract) This is why options are powerful: increased leverage combined with decreased risk.

Risk Vs. Return

Note this is a reduction in the risk, not a lack of risk altogether! Most of the options traders trade options without ever trying to understand the theory underlying options. You need to understand the theory behind options because without it you won’t be able to develop your strategy for exploiting a particular profit making opportunity This is one of the main reasons why most of the traders make unprofitable option trades. On the other hand, options trading can be an incredibly powerful wealth creation vehicle when you know how to trade safely. However, without proper training from reputable establishments, you are likely to lose money. It makes sense then, to invest in your education to maximise your return and ensure a long term stream of income.

Get Educated

Options University was founded by Ron Ianieri and Bret Fogle in 2004 with the purpose of providing top of the line courses, seminars and live web classes on options trading to investors. Ron Ianieri has been a professional options floor trader and is the Chief Options Strategist at the Options University. He knows the intricacies behind options trading strategies. His step by step approach aimed at all levels – beginner, intermediate and advanced can upskill anyone motivated to improve and learn a hugely profitable and life long skill. Anyone, with focus and taking action can become a master options trader in just a few short months.

Knowing you want to make a difference in your financial future is great, but you need to take action and look at this option trading course TODAY.



By: Dorian Hernandez

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It is very common that stock is transacted in blocks divisible by 100, which is called a round lot. A round lot has become a standard trading unit on the public exchanges for quite sometime ago. In stock market, we have the right to buy and sell an unlimited number of shares as long as there are people are willing to sell and we are willing to buy at the price that the seller has fixed. Usually, for a brokerage firm, they set their commission for a transaction for minimum 100 units of share at a certain price. If we buy less than 100 units of share, they still impose us this commission. For an example, if we buy 100 units share and pay the brokerage firm USD 30 for the buy and sell transactions, they also charge us that amount: USD 30 also, if we only buy and sell 1 units of share. The amount of commission that the brokerage firm charges for the stock transaction is varied from one and other. Some brokerage firm may charge less but they require you to trade a lot in one transaction. So, each unit of option is representing 100 units of share.

In fact, there are two types of options that are call and put option. Call option gives its owner the right to buy 100 units of share of a company at a specified price that has been agreed between the call option owner and the seller within certain period of time. So, within this period of time, if the stock price goes up, the call option price will also go up and vice versa. The second type of option is put option. This option gives its owner the right to sell 100 units of share of a company at a specified price that has been agreed between the put option owner and the seller within certain period of time. Put option seems like the opposite of call option. If the stock price goes up within this period of time, the put option price will go down. Either call or put option can be bought or sold. As long as there are people willing to sell, there will be people willing to buy. There are four permutations that are possible exist during the transaction of an option. The first one is buying a call option meaning that buy the right for yourself to buy 100 units of share. Second is selling call option meaning that sell the right to buy 100 units share from you to someone else. The third one is buying a put option meaning that buy the right for yourself to sell 100 units of shares. The last one is selling a put option meaning that sell the right to sell 100 units of share to you to someone else.



The other way to make these differences clearer is always remember that the call option buyer hopes the stock price will go up and the put option buyer looking for the price per share to fall. For the opposite side, a call option seller is hoping the stock price will maintain or fall. Whereas, put option seller is hoping that the stock price will go up. If the option buyer no matter dealing with the calls or puts option is correctly predicting the price movement of the stock, then they will gain profit from their action. For option, there is another obstacle we have to face besides estimating the direction of the stock price movement. This obstacle is that the change of the stock price has to be taken place before the deadline of the option. As a stockholder, we may be able to predict a stock’s long-term prospects by waiting for a long-term change of the stock. However, for option holder, we may not have that kind of opportunity. This is because options are finite; they will lose all their value within a short period of time, usually within a few months. However, it has long-term options that can last up to one to three years. Due to this limitation, time will be an important factor to determine whether an option buyer can earn a profit or not.

Foremost, option is granting the buyer an intangible right to buy or sell 100 units of share at an agreed price between the buyer and seller of the option. Therefore, option is just an agreement regarding to 100 units of share of a specific stock and to a specific price per share. Therefore, if the buyer buys an option at the wrong timing, then, the buyer will not able to make any profit. Wrong timing means that the stock price does not move or does not move substantially when the deadline has arrived. When we buy a call option, it seems like we are agreeing that we are willing to pay the price that being asked to acquire a contractual right. The right provided that we may buy 100 units of share of stock at a specified fixed price per share, and this right exists at the time we purchased the option until the deadline of the option. Within the time we purchased the option until the deadline of the option, if the stock price goes up more than the fixed price indicated in the option agreement, this call option will become more valuable. Just think that we buy a call option that granting us the right to buy 100 units of shares at the price of USD 70 per share. Let said before the option deadline, the stock price has gone up to USD 90 per share. As an owner of this call option, we have the right to buy 100 units of share at USD 70, which is USD 20 less than the current market price. This is the situation when stock market price is more than the fixed contractual price indicated in the call option contract. In this example, we as buyer would have the right to buy 100 units share, which is USD 20 less than current market price. Although we own the right to do so, we may unnecessarily to execute our right. For an example, how about if the stock price has gone down to USD 50. We would not have to buy shares at the fixed price of USD 70 and we could select not to take any action.





By: Alexander Chong

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Have you ever considered investing in the stock market? Even with the way the stock market is moving? With today’s economy, stock trading is extremely risky for beginners. If you don’t know what you are doing in stock trading, you can lose your investment very quickly.

There is an alternative that many new investors do not know about. It’s called “Binary Stock Option Trading.” Basically, Binary Stock Options only have two outcomes. Either you win a certain percentage of your initial deposit or you lose your initial investment, but when you lose, you still walk away with a small percentage of your initial investment.

The best part of Binary Stock Option Trading is that you are now able to do this online with a minimum investment of $30. If you are new to stock trading, Binary Stock Option Trading may be the way to go. You do not need to know much about the market or how to read complicated charts and graphs. Also, you do not need to download any complicated trading platforms, as there are easy to use online trading platforms that you can use directly online.

If you are interested in learning more about Binary Stock Option Trading, visit www.EZmoneytrader.com to learn some simple techniques that will guide you to making money online with Binary Stock Options. Investing can be extremley profitable when you know how to invest properly. The number one reason why new investers lose money is because they were never taught how to make it. Happy Trading.



By: Mike Edwards

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We often hear people saying that trading or investing in options is very risky. Yes, it is certainly no mean feat to trade or invest, using options as your investment vehicle. But is it really that risky in the first place? If trading or investing in options is really risky, then why are there so many individual traders or investors who make money from it? The only possible explanation is that those people had spent a lot of time and effort to study, understand and learn all they can about options in addition to the basic technical knowledge of how the market functions. They would have learnt how to increase their probabilities in making a profit and also reduce their risk to the minimum.

So what actually are stock option greeks? Why is it important to understand how they can affect the profitability of your trade or investment? Stock option greeks are actually sensitivities of the stock option to risks characteristics. These risks are actually factors that affects the pricing of the option. By learning how the stock option greeks relate to risk characteristics in addition to other basic technical analysis skills such as identifying the market trend, knowing when to and not to trade or invest according to timing ( Eg. Not to trade during lunch hours ), interpreting technical indicators correctly, have a risk and money management system to assist in making decisions when trading or investing ( This helps to eliminate and not involve your emotions that affect your trading decisions ) …etc We are able to have certain control over our risk exposures to leverage, time decay, volatility and interest rate risks. Each option risk characteristics, is represented by a greek word and they affect the option pricing differently. It is important to know whether you are purchasing a stock option at a under or over priced value as this can be another factor that will affect profitability of your trade or investment. You do not want to be in a disadvantage position at all times when trading or investing as the majority of the factors are against you and you have absolutely no control over them. ( Eg. Interest rates )

Mastering each risk characteristics will certainly help to reduce risk tremendously when trading or investing in stock options, what’s more, there are lots of stock option strategies that can be utilized once you understand the mechanics of the stock option greeks and make them work for your trade or investment.



By: Ben Ang

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