Have just started learning options, I initially read "The Options Course" by Fontanallis, great place to start IMO. Also, can follow up with "The Option Trader Handbook". Another goodie. Check the BOOKS link at the top of your ET page. Has some good books with great reviews. A lot of these books you can find on the internet as a pdf somewhere.... Can spend hours looking though LOL.
I would recommand the Options Lab at <a href="http://www.theoptionslab.com">http://www.theoptionslab.com</a>, it shows you all the stuff you need to do regarding an options strategies, its P & L and greeks. You can see how your trade play out by adjusting the volatility, price and days to expiration. The only thing it doesn't do is prediction.
NO PREDICTION!!! what thats junk, I prefer a software that will predict optimal strikes for friday expiation and have 99.95% accuracy.
Let's say you want to short a stock XYZ for $10,000 tomorrow morning and you want to get the opening price. The day after tomorrow you want to cover your position with limit order of 2% profit to make $200. If you want to follow this strategy, is it better to make an actual short on the stock as described above, or it is better to do the same but with options somehow. (I have no idea how)? Thank you
Depends on the stock. With BIDU a 2% move isn't very much and the options might not move enough to offset the risk. A 2% move on the DIA will produce killer returns if using options.
You mean that for volatile stocks is better to short the stock itself but less volatile using options is better? In the above example you mean that BIDU stock would reach the 2% profit and you would closed the position, but the option on BIDU would not reach that 2% profit (or the $200 profit). And in case of shorting DIA, buying options would be easily making $200 even if the stock itself has not reached the 2% limit?