I am relatively new to the stock market. I am interested in learning how to buy options. My question is, where is the best place to learn about options? I've looked on here and I just don't feel that I understand it well enough yet. Any suggestions? Thanks.

www.optionsmonster.com pete and john nagarian man thats what these guys do. period.

log onto cboe.org it's the chicago board of options exchange website, they have tutorials and you can get a dummy (practice) account.

as a new investor, I would NOT jump into options until you understand the risks/benefits of them.

You can make 100% in one day, you can also lose that same investment in even less than that...

Stick to buying calls and puts until you have a lot of money that you can use to back up your bets...

Options can be like rolling the dice in craps... Sometimes it pays off, but often times you lose it all.

Read read read and read as much on the subject as possible.  If you can paper trade somewhere like thinkorswim.com I would strongly suggest doing that.    Guy Cohen wrote some good books and also a book called Options Pricing and Volitility is a must read.   Alos, you must must must understand the underlying stock you  are trading the option for.   Also, trade slowly for as long as it takes to fully understand what you are doing.  You will make mistakes and you don't want to get blown out of your trading account in just a few months.  I like to never hve more than 20-25% of my cash at risk in options at any one time.  That's just one of my money managment rules that has worked well.

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-Sean

Firefighter51:

I am relatively new to the stock market. I am interested in learning how to buy options. My question is, where is the best place to learn about options? I've looked on here and I just don't feel that I understand it well enough yet. Any suggestions? Thanks.

Having read many options trading books, I highly recommend "Getting Started in Options" by Michael C. Thomsett.   Everything you need to know about options trading is in that book.

I learned from Wade Cook's books & seminars ... back before the 2000 implosion.  Back then, I lost -- largely by buying an out-of-the-money call & hoping it went up enough.

Now I'm doing just one strategy -- covered calls -- which uses options to improve cash flow but doesn't incur the level of risk of simply buying then selling the options.

Daniel - How do you decide on strike price for writing the call ?

I'm no expert, so take what I say with a grain of salt!

Wade Cook taught (IIRC) to write in-the-money calls.

I'm looking at going as close to the money as I can.  If the stock price is $5.93 or $6.11 I'll be writing a $6 call. 

Personally I like stocks that are very close to a strike price.  If I have to write a call 50 cents or a dollar out of the money, it doesn't sell for much.  If I have to write it 50 cents or a dollar in the money, the difference between the strike price and the price I pay for the stock eats up a big chunk of my earnings.

Another good book for CC writing is "The Short Book on Options" by Wolfinger.   It's less than 125 pages but it's a nice primer.

A twist on the CC strategy is to sell puts just out of the money on a stock you like but don't own yet.  You do this each month until you get assigned and then you sell just out of the money calls against the stock right away.  Eventually, when you are execised, you turn around and sell just out the money puts again.  Repeat month after month until you don't like the stock any more.  You have to have level 2 trading and enough money in your account to cover getting the stock but it's a nice way to play both sides.

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-Sean

Sean,
Intresting strategy, thanks for sharing it.

Thanks both of you for sharing.  I found some success with covered calls when I was not too greedy.  I just need to stick to taking small profits and moving on.

SeanK:

A twist on the CC strategy is to sell puts just out of the money on a stock you like but don't own yet.  You do this each month until you get assigned and then you sell just out of the money calls against the stock right away.  Eventually, when you are execised, you turn around and sell just out the money puts again.  Repeat month after month until you don't like the stock any more.  You have to have level 2 trading and enough money in your account to cover getting the stock but it's a nice way to play both sides.

There is one major problem with this strategy that they forgot to mention it in the books (Zecco doesn't mention it any where on this website either),  in order to sell/write puts, you need a trading account with $50K minimum. 

$50K minimum?  Really?  Wow, I was not aware of that.  I don't use this type of strategy in my Zecco acct. so I didn't know.  Why the heck do they want so much for selling puts?  It's defined risk.  You should only need enough to cover the cost of being assigned the stock either with cash or margin.  Now selling calls I can see them wanting more $$.  It's an umlimited risk position and theat makes sense. 

Thanks for the info.

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-Sean