Any help/advice on options trading?

Discussion in 'Options' started by Chance360, Sep 23, 2007.

  1. Chance360


    Hey guys!

    I'm new here, and I've been looking if I could find some friendly help/advice from those that have experience with these sort of things.

    I'm 17, and I chose to do a project on, a Senior Project that is required by me to be finished and presented in order to graduate before I go on to college.

    I've been doing some research and study on my own,

    Here's part of what I'm aiming for.

    Stock Market - Options trading

    Learn how to read an option
    Learn how to read an option chain (for calls and puts)
    Select and analyze 15-20 options
    For 15-20 options selected, I must write a 1 page justification for why I would or wouldn't invest in it,
    Virtually trade a minimum of 5 options,
    Put together a stock portfolio
    Chart options daily for 2 months
    Complete investment tracking records for 15 companies
    Print analysis report for each company

    If any advice or help can be given to help me out, I'd appreciate it.

    I'm really looking for places to deeply learn how I am supposed to make a stock portfolio or really how its supposed to look like and be formatted. Any useful sites/books that can be provided will be greatly appreciate it.

  2. Use the 'search' button on this forum.
  3. lar


  4. The first thing you will learn is that options are derivative securities. That means they each get their value from the value of the underlying stock. If you're going to build an options portfolio, the first thing to do is pick some stocks. And even that is pretty complex.

    Once you've picked the stock, there are maybe a dozen basic option strategies, made up of combinations of calls and puts, depending on where you think the stock is going. You have about 4-6 different time frames to w**k with, and some strategies involve trading more than one expiration date at a time.

    Obviously, there are basic principles like "calls go up when stocks go up, puts go up when stocks go down". Except, they don't always.

    At your level of study, I would try to keep things relatively simple. You can use basic strategies like covered calls to show how you can generate income on an existing stock portfolio, vertical spreads to show a limited-risk high-yield directional play and butterflies to show a directionless time/volatility play. These are a few of the tricks you can play with options that you can't do with stocks, since with stocks all you can do is hold shares or not. You can also show what happens when these positions go wrong.

    Remember, every option position depends on the stock behaving itself in some way. You can sketch graphs of profit and loss points relatively simply for even complex option positions. The trick is to put the profit where you think the stock will end up.

    EDIT: Oh, and Google is your friend. There's more beginner's material out there than you can ever hope to find the time to read.
  5. kny3


    Hey Chance 360.

    Other advise you've been told here good, especially one about options being a derivative. So bullish or bearish on a stock leads you into bullish or bearish option strategy in stock, ETF or Index.
    I'd do 3 things, pretty cheap & simple.
    Get Michael Thomsett "Getting Started in Options", probably $15 or less at Amazon, don't need anything for your project more complicated or expensive. Pretty easy read.
    Second, at they have a virtual trading platform (it's OptionsXpress) that allows you to "paper trade" options, real prices, commissions, etc.
    Scroll back thru old options posts, I remember a bunch from newbies.
    Good luck.

    kny 3 :cool:
  6. Chance360


    Thank you guys!

    I'll look over these ,and get back to ya guys!

    Thanks though, Ireally greatly appreciate the help and insight, I wouldn't have been able to find such information without looking deep in the search engines...but damn old dial up makes it go soo slow lol


    Well, c ya laterz!!