Options are by far the most versatile trading instrument. There is a lot of money to be made with them, if you do it right. They can be used like an insurance policy, like a lottery ticket, like a bank CD, and many other things besides. And unlike anything else, used in a certain way they can make money from an absence of price movement. But the learning curve can be daunting. If you’ve never traded them, where do you start?
Every week in this space, our instructors give you solid, actionable information designed to help you make more money with options. That information ranges from the basic through intermediate to advanced, as do the experience levels of our readers.
As a long-time instructor for Online Trading Academy, one of my specialties is explaining complex subjects to new traders in understandable terms. As adults with money to trade or invest, almost all of us have come from other fields where we are experts. But trading is a whole new world. That is especially true for options, with all their moving parts.
Since I came into trading a few years ago as a nearly complete beginner after many years in another career, I have first-hand experience of what that’s like. So for those of you who are new to options, or who have never really thought about trading them before, I want to help give you a starting point. Over the next few weeks, on alternate weeks, I’m going to go through the subject in the most basic way. Even if you’re a veteran, these articles may give you a deeper understanding of some aspects of options than you had before.
There are a few oversimplifications as each topic is introduced for the sake of clarity, but we’ll clean these up as we go along.
Without further ado, let’s begin.
Profit is made by selling something for more than its cost; if sold for less, there is a loss.
That simple statement describes every possible monetary transaction.
We enter into many monetary transactions every day of our lives, whether we are… Continue Reading
