OPTIONS TRADING CRASH COURSE: Mastering Strategies for Financial Success (2023 Guide for Beginners)

By Oswald Beck

Are you ready to embark on a thrilling journey into the world of options trading? Look no further than "Options Trading Crash Course," your comprehensive guide to mastering strategies for financial success in the dynamic realm of options trading.

In this book, you will discover:

• Fundament

• Language: English
• Publisher: Oswald Beck
• Release date: Sep 5, 2023
• ISBN: 9783988314963

Oswald Beck

Oswald Beck, hailing from the vibrant city of Dallas, Texas, is a seasoned options trading expert with a passion for teaching beginners the art of successful trading. With years of experience in the financial markets, Oswald has honed his strategies for financial success through options trading. He's dedicated to simplifying complex concepts and helping newcomers navigate the world of trading with confidence.

Book preview

TABLE OF CONTENT

CHAPTER 1

OPTION TRADING FUNDAMENTALS

WHAT EXACTLY ARE STOCK OPTIONS

CHAPTER 2

TIPS FOR BEGINNER

CHAPTER 3

PRICING AND VOLATILITY STRATEGIES

CHAPTER 4

CALL AND PUT OPTIONS

CHAPTER 5

THE COLLAR

CHAPTER 6

VERTICALE SPREAD

CHAPTER 7

HORIZONTAL SPREAD

CHAPTER 8

STRANGLES AND STRADDLES

CHAPTER 9

THE GREEKS

CHAPTER 10

TECHNICAL ANALYSIS

CHAPTER 11

PROBABLE TIPS AND SUGGESTIONS FOR OPTIONS TRADING SUCCESS

CHAPTER 12

COMMON OPTIONS TRADING ERRORS

CHAPTER 13

EASY TO USE STRATEGIES

CHAPTER 14

TIPS FOR OPTIONS TRADERS

CHAPTER 15

THE DIFFERENCES BETWEEN FOREX, STOCKS, AND OPTIONS

CHAPTER 16

MANAGEMENT OF MONEY

CHAPITRE 17

SUCCESSFUL TACTICS

WHICH TYPES OF TRADING ARE PROFITABLE

CHAPTER 18

BINARY OPTIONS

CHAPTER 19:

CHOOSING A BROKER

CHAPTER 20

AVOIDING COMMON OPTIONS TRADING PITFALLS

CHAPTER 21

TRADERS' PSYCHOLOGY

CHAPTER 22

OPTIONS CHAIN

CHAPTER 23

TRANSACTION FEES AND SLIPPAGE TRANSACTION COSTS

CHAPTER 24

USING OPTIONS TO INCREASE PROFITS

CHAPTER 25:

CHOOSING THE RIGHT MARKET

CHAPTER 26

BEGIN WITH THE SIMULATOR

CHAPTER 27

A 7 DAY PASSIVE INCOME STRATEGY

CHAPTER 1

OPTION TRADING FUNDAMENTALS

WHAT EXACTLY ARE STOCK OPTIONS

T

o grasp the definition of stock options, we must first understand the meaning of the two terms separately. The entire amount of money a corporation has by selling shares to people is referred to as stock. A percentage of the company's ownership may be sold to the general public.

Option (finance): A contract that gives the buyer the right, but not the responsibility, to sell or purchase an asset at an agreed-upon strike price at a specific date dependent on the kind of option.

We can simply define stock options now that we understand the definition of both stocks and options. The phrase may be defined in the following ways:Stock options provide an investor the right to sell or acquire a stock at a certain price and date.

A stock option may also refer to a benefit in the form of an opportunity granted by a corporation to any employee to purchase shares in a company at a predetermined set price or at a discount.

Stock options have gained popularity in recent years. People are increasingly interested in trading options. The profitability of stock options has sparked several discussions. Some think it's a fraud, some say it's not a good investment, and yet others say they're making millions from it. All of these conjectures lead us to the same conclusion: what are stock options? To adequately answer this issue, we must carefully examine stock options. We shall be expected to know everything there is to know about it. This knowledge makes it simple to make decisions based on real facts rather than preconceptions. You will have the opportunity to say something that you can genuinely back up. Knowledge offers you an advantage and puts you in a strong position.

Recognizing Stock Options

To comprehend stock options, we examine the following:

Price of a Strike

To determine if a stock may be exercised, the strike price must be considered. There is a price that an option is projected to have by the time it reaches its expiry date. This price, which should be lower or greater than the stock price, is known as the strike price of an underlying asset. If you believe the value of the stock will rise in the future, you may buy a call option at the strike price. When it comes to putting options, the strike price is the price at which the option buyer trades an asset by the time the contract expires. The striking price is also known as the exercise price. It is an important component to consider when determining the option value. The strike price will vary depending on when the options are exercised. As an investor, keeping track of the strike price is beneficial since it aids in determining the quality of an investment.

Styles

There are two primary types of options. These are European and American styles. If you wish to trade options, it is a good idea to familiarize yourself with the different styles.

As you examine the styles, you will notice which ones suit you and which do not. You will also discover that certain styles are simpler to learn and manage than others. You may choose the one that is most comfortable for you and avoid the one that you find difficult to grasp. The American-style option permits one to execute a trade at any point between the moment of purchase and the expiration of a contract. Most traders choose this method since it is more convenient. It permits one to do a transaction at any time while a contract is regarded to be valid. In comparison to the American style, the European style is less widely utilized. A trader may only execute their options in the European option style during the expiry date. I would avoid employing the European technique if you are not experienced in options trading.

Date of expiration

An expiry date is the time after which a contract is considered worthless. Expiration dates are assigned to stocks. The time between when they were acquired and when they expire indicates the validity of an option. As a trader, you must use the contracts to your advantage within this time limit. You can trade as often as you like and still make a lot of money between the time you purchase and when you sell. Learn to make the most of the time you have. If you are not cautious, the option may expire before you have the opportunity to exercise it. Many newcomers make this mistake and end up losing a lot of money. When participating in the stock market, you must be alert. If you fail to check the expiration date, your stocks may be considered worthless and you will be unable to invest in them. In rare situations, the stocks are exercised before their expiration date. This is a frequent European choice. This is not something I would recommend to a newbie. It is risky and might result in a loss if you are not cautious while carrying out the deal.

Contacts

Contracts specify the number of shares that an investor intends to acquire. One contract is equivalent to one hundred shares of an underlying asset. Contracts contribute to determining the value of a company's shares. Contracts are usually valued before they expire. A contract might be considered worthless beyond its expiration date. Knowing this will assist you in determining the optimal moment to execute a contract. If a trader buys ten contracts, he or she will get ten $ 350 calls.

When the stock price rises over $ 350, the trader has the option to purchase or sell 1000 shares of their stock for $350 at the expiration transaction.This occurs regardless of the stock price at the moment. In the event that the stock falls below $350, the option will expire worthless. As an investment, this will result in a total loss.

You will lose the whole money you spent to acquire options, and there will be no way to recover it. If you want to invest in options trading, you need to learn about the contracts and how to execute them for a lucrative options trading conclusion.

Premium

The premium is the amount of money paid to acquire options. The premium is calculated by multiplying the call price and the number of contracts by 100. The '100' represents the number of shares in each contract.

This is more akin to a trader's investment with the expectation of high profits. While investing, you will hope that the investment you choose will be lucrative. Nobody goes into business expecting to lose money. One is always hoping that the investment they have decided to make will be profitable. You will continuously strive to get the most out of a deal.

The criteria listed above provide more information about stocks. If you were perplexed and didn't completely get what stocks include, you now have a better idea. When you decide to invest in stocks, you will come across several terminologies. Do not be alarmed by the terminology; they are generally things you already knew but didn't realize were referred to by those names. Many individuals avoid investing in stocks because they do not comprehend the different terminologies that are employed.This should not be happening. You may spend some time going through the terminology and making sure you understand what they mean.

Stock Market Options

Stock options are not as difficult as many make them out to be. People often attempt to make things seem tough, but it is a simple concept that virtually everyone can comprehend. Do not be deterred as a newbie into believing that options trading is a tough investment.

You'll be astonished at how simple it is, and you'll wonder why you didn't do it sooner. When investing in stock options, investors must take four variables into account. Taking these elements into account will have a favorable influence on their business.

The Possession of a Right, but Not the Obligation

What thoughts come to mind when you read this statement? When we speak about rights, we imply the ability to acquire a certain form of choice. When we speak about obligation, we are referring to the fact that one lacks the legal power to perform a responsibility. Options do not provide traders the legal power to perform an obligation. This signifies that trading is permitted, but it is not legally required.

r Selling

As a trader, you have the ability to buy or sell an option.

There are two kinds of stock to pick from. There are two options: put and call. Both are distinct and have distinct advantages and disadvantages. If you wish to trade options, it is critical that you first educate yourself before trading or acquiring equities. This information will affect your predicted revenue. The stocks you select to purchase or sell will determine whether you make large returns or lose money.

Determined Price

To execute the option, a particular price has been specified. The cost will vary based on the option selected. Certain stock options are more valuable than others. The price of options is influenced by a variety of things.

Expiration Date

When a contract expires, it is deemed worthless. Stock options have a set expiration date. The value of an option is determined by the date. A contract is considered valid at any time prior to its expiry date. This implies that it may be used to produce money at any time before it expires. When the option expires, the trader has no ability to exercise it. This is because the contract is considered worthless. As an investor, you should always check to make sure that your investment is still legitimate.

CHAPTER 2

TIPS FOR BEGINNER

I'll admit it: I'm a covered-call addict. I've been selling covered calls since 1996 and have earned hundreds of thousands of dollars. After all these years, I'm still shocked that someone is prepared to pay me for the opportunity to benefit from my stock.

There is a widespread belief that trading options is inherently riskier than trading equities. It's simple to understand where this notion stems from many individuals do trade options recklessly. Options may be utilized to increase both the upside and downside returns. In the hands of untrained or selfish individuals, this might be a formula for catastrophe. The majority of these rash traders are purchasing options. The approach you are going to learn includes the sale of options.

This is how it works:

You purchase a stock and then execute a transaction (you sell some call options). This contract states that you will be paid today (the premium) in return for foregoing the stock's potential gain beyond a specified point. Perhaps you acquire 100 shares of company XYZ at 20.00 and agree to forego any potential gain over 21.00 (the strike price). In return, you will get $1.00 per share (or $100 if you hold 100 shares). Let's recap what just happened: you purchased 20.00 for stock and received 1.00 instantly. In reality, you only spent $19.00 for the shares.

If the price falls to zero the next day, you will lose $19.00 (or $1,900 if you hold 100 shares). If, on the other hand, you had purchased the stock without engaging in the contract and the price fell to zero the following