Trading Stock Options: Your Step-by-Step Guide
Trading stock options in a safe, conservative manner can indeed be healthy for your financial bottom line. In this section, you’ll learn how to develop your own step-by-step plan to design and begin a conservative, option-selling program for generating extra income. Trading stock options will become an enjoyable and profitable affair. You will learn: How to develop a
personal income plan.
What type of underlying security (stock or ETF) is best to use. How to use stock charts to evaluate which strike price to sell your option. How to use general stock market analysis to determine whether it is an opportune time to safely sell options. How to practice these techniques at no risk by using a technique known as paper trading to evaluate which strike price to sell your option.
How to document your ongoing learning by creating an
options trading journal.
By following this guide to learning options trading you will find yourself set up and ready to go. You will have considered and decided on a covered-call strategy, a cash-secured put strategy, or both. You’ll have decided on whether to use individual stocks or ETF's as your underlying security. You’ll be confident that the option you want to sell passes a "visual exam for safety" you can make using stock charts. You will know if the current market is conducive to safely and successfully using these techniques. And, if you want to practice with “fake money” you can simulate your plan risk-free by paper trading. Here is a Sample Trading Plan for your consideration. How long will it take me to become proficient at this?, you may ask. Don't worry! Follow the plan: Educate yourself, determine what type of options trades you will enter, paper trade until paper profitable, and then trade live with small positions. It doesn't matter how long it takes. Enjoy the journey!
|
