Lessons to Learn in Intermediate Option Education
Once you’ve got the basics of option education under your belt – what options are, how they work and what they can do for you – it’s time to get a little more technical in your training. Like any market, the market for options is a complex one and option trading strategies are diverse, to say the least. Many traders swear by arcane signals and chart formations to tell them when to buy and sell, but there are some generally accepted principles and processes that most options traders follow. Any good beginner-to-intermediate trading education course will focus on those and give you a good grounding in the basic technical aspects of trading options.
Some of the subjects covered by intermediate option education courses are nearly intuitive, especially for those who have been trading options for a while. For beginners, though, the process of doing things like putting together a watch list or reading signals can seem almost magical, as if there’s no rhyme or reason to them at all. Likewise, many new traders find themselves staring at all the fiddly bits and pieces of the trading platform they’ve chosen and are completely mystified on how to use them or why they should. If you’re just starting out, you’ll benefit from learning more about subjects such as these.
Technical Analysis vs. Fundamental Analysis
Technical and fundamental analysis are the two main systems by which options traders choose their options and develop their buy/sell strategies. Fundamental traders study the underlying foundation of the stock and what’s happening around it. Technical traders rely strictly on the trading history of the stock. Which is better? You’ll find passionate advocates on both sides of the issue, as well as those who believe that the best strategies combine the two. Find a good trading education course that delves into the two and make up your own mind about which works best for your comfort level and style of trading options.
Volatility
In options trading, movement in the market generates profits. No one makes money on options in a stagnant market. The trick to making bigger profits in option trading is learning to predict volatility – not only when, but how much and in which direction. There are ways to calculate volatility and ways to calculate the effect volatility will have on the price of an options trade. Understanding how volatility affects pricing is a major factor in being more successful as an options trader.
The Greeks
The Delta, Gamma, Theta and Vega of a stock option are collectively known as “the Greeks.” The Greeks let traders measure the sensitivity of a particular option to changes in the price of the stock from which it is derived. Understanding the Greeks can give you important insight when trying to decide whether to enter or close out a position.
It’s possible to trade options with just a basic option education, but the more you know about more advanced topics, the more likely you are to make successful trades. Whether you’re already trading or are just getting to know your way around the market, option education is a vital part of your success.
Chris Robertson is an author of Majon International, one of the world’s MOST popular internet marketing companies on the web.
Learn more about Option Education
Processing your request, Please wait....
