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How does option trading differ from stock trading? This is a great question to ponder as you start to look at the options world. There are many differences due to the makeup of options and there are similarities as well. So let’s take a look at the similarities first. When you buy a stock you want to sell it at … Read More

Is there a difference between a credit spread and a debit spread? Of course you might answer that you receive a credit for the credit spread and pay a debit for the debit spread, right? Well, you might come to find out that it is never as simple as one might think with options trading. Let’s take a look at … Read More

Have you ever joined a trading group? You know, the kind that meets once a month in your local town or maybe an online group or chat room? Are these groups a good idea and can they really help you? Well, it really depends on what you are looking for. In his book High Performance Trading, Steve Ward writes “There … Read More

When new traders first discover options trading they get excited by the leverage that buying options can provide. One call option contract allows you to control 100 shares of the underlying security. So instead of buying the stock on margin, you can buy an option using a lot less capital. This leverage attracts traders who have limited resources because under … Read More

How do we choose the perfect security for trading options? The evolution of options trading strategies will continue to expand but the one thing that will never change is the relationship between volatility and risk when assessing your next options trade. One of the considerations when trading options is what underlying vehicle you should trade. Should you trade options derived … Read More

What does it take to become a successful options trader? This is a very complex question, but we will try to give a few brief thoughts on the subject. Most people believe that to be a successful options trader, it simply requires learning one of the many options trading strategies that provide the trader an edge over the market over … Read More

Is there a method to determine the probability of an options trade? One of the terrific characteristics of trading options versus trading stocks is that there are methods of calculating probability of profit before you initiate the trade. The features of time decay, strike price and option volatility are unique to options trading strategies and apply whether you are buying … Read More