Experienced stock trader, but new to options, looking for resources

Discussion in 'Options' started by jmiles301, Nov 3, 2016.

  1. Hello -

    I have been trading full-time for over 10 years but 99% of my trading throughout that time has been confined to trading stocks, not options. I have made some options trades along the way, but not very many.

    I am highly motivated in learning more about options, but I'm not sure where to begin since there are so many different books and online resources out there.

    I'm not necessarily looking to get into any super complex options strategies, but I'm assuming that there are some things that I could be doing with them (above and beyond simply buying a call or a put) that would be beneficial to my trading.

    I was hoping that there might be a few good options traders that see this and could recommend some resources for me to begin learning more (books, websites, subscription-based services, etc..).

    From a subscription-based service standpoint, I'm not looking for something that simply tells you what they are trading and when they are trading it (basic trade alerts); I'm looking for something that would allow me to learn the underlying concepts so that I can better understand the "what" and the "why" and incorporate that into my own stock-trading methodology.

    Thanks very much for your time,
    lawrence-lugar likes this.
  2. Robert Morse

    Robert Morse Sponsor

  3. Thanks for the links Robert, appreciate it.
  4. Glad to help, in a previous thread I said.....

    1. In order to better understand options, options pricing, and buy/sell decision making, most of us have read at least some of the better literature available to us to, Here's what I have in my library;

      -Option Pricing & Volatility (2nd Edition)..Sheldon Natenberg

      -Options as a Strategic Investment (5th Edition)..Lawrence G. McMillan

      -The Complete Guide to Option Selling: How Selling Options Can Lead to Stellar Returns in Bull and Bear Markets (3rd Edition).. James Cordier and Michael Gross

      Options, Futures, and Other Derivatives (9th Edition)..John C. Hull

      Getting Started in Options (8th Edition).. Michael C. Thomsett

      Option Spread Trading: A Comprehensive Guide to Strategies and Tactics..Russell Rhoads

      - Trading Weekly Options ..Russell Rhoads

      Plus more.

    2. Use a trading platform to study the daily markets for some time before committing capital to the game. Learn how options are priced as compared to the underlying and how options prices.

    3. Have a Trading Plan and a Trading Strategy. In writing.

    4. Know which of the 20+ options strategies you plan on trading. Buy a Put or Call, Sell a Put or a Call, Buying or selling a Straddle or Strangle, Buying or Selling a Credit or Debit Spread, Ratio Spread, Calendar Spread, etc. What strategy(s) you chose will help determine what to buy and/or sell.

    5. Study the options you plan to trade. Stocks, Bonds, ETFs, Furtures, etc. What time do they trade, are the Weeklys, EOMs, Serials, etc. Which exchange(s) do they trade on?

    6. Study the free stuff that the industry makes available to us. CME, CBOE, BOX, ISE, OCC, OIC, etc.

    7. Know what the markets are doing elsewhere (e.g. Asia, Europe, etc.) before the markets open here. Dozens of websites to help with that during the pre-market hours. At the same time watch the U.S. pre-market activity. Are the index futures (ES, YM, NQ, etc.) up or down? That will help you understand what drives the market and how it affects options pricing. Going to trade a specific stock symbol? E.g. AAPL, MSFT, etc. then pay attention to pre-market news and activity. That may help in your decision making also.
    Like others here I trade credit spreads. In my case mostly on the ETFs (SPY, IWM, EEM, QQQ, DIA, etc.) Credit Spreads are not overly complex, are relatively easy to understand and offer limited risk (and limited profit). My entry and exit points (i.e. what prices do I buy and sell at) are based on Implied Volstility, % Out of The Money, Delta (one of the greeks), Distance the Puts or Calls are from the At The Money price (at lease 1.5x 1 Standard Deviation), Time Remaining to Expiration, and some other factors. I do not set stop loss orders but do manage the trade based on constant monitoring of market activity (using a smartphone app when necessary), whether and/or how to close or roll a spread that is ATM.

    Hope this helps.

    In addition I would visit, at a minimum, the following websites to help further your education;

    The Options Industry Council

    The Options Clearing Corporation

    Chicago Board Options Exchange (CBOE) Education Center

    Chicago Mercantile Exchange Education Center


    Financial Industry Regulatory Authority

    National Futures Association


    Note also that many brokerages (e.g. Fidelity, TDAmeritrade, TradeKing, eTrade's OptionsHouse, Scottrade, etc. offer a lot of free information; in hopes that you'll open an account there but still some good information.
  5. I should have also pointed out that there's also a number of magazines available on the newsstands (e.g. Barnes and Noble, Books A Million, etc.) that feature articles and columns about options and how to analyze/trade them. They include;

    Modern Trader (was, until 2015, Futures and still is on the Web)

    Technical Analysis of Stocks and Commodites

    ThinkMoney (online and mostly options oriented)
  6. ET180


  7. For myself, I learned more by modeling on ThinkorSwim Analyze tab. This taught me more than any book.
  8. I utilize both the probability analysis and the strike prices and dates to find the best model.