This has been a very interesting thread to watch because I am often asked to recommend a book, or trading course, or provide advice in some fashion about how best to go about learning the profession of options trading. As a retail options trader, there is no one path and by virtue of the fact of our independence we are left to find our own way.
I've been trading stocks since the 1980's and now options for several years. As Alex Jacobson has already mentioned, the key to success in this business is learning how not to lose money. That's the same rule Warren Buffet has hammered into his own skull: "Rule No. 1 - Don't Lose Money. Rule No. 2 - Don't Forget Rule No. 1."
Can a retail options trader make money? Yes. But most do not. I believe that is a reflection of the general failure of most retail options traders to grasp the concept of risk management. Their focus is on profits. That's not where you focus needs to be. If you place yourself in the market the profits just sort of happen when you're busy preventing yourself from losing money.
Yeah, you probably should learn about options pricing and the various option strategies. Knowing how to adjust positions is helpful. I'd suggest learning as much as you can about the subject. Ultimately, all of that knowledge is only as useful as your ability to manage risk and limit losses.
Someone mentioned Dan Sheridan's program. I have a lot of respect for Dan Sheridan. I have watched many of his videos at he CBOE website. I'm planning on flying out to Colorado later this year to see him speak. His mentoring program has received nothing but positive reviews. But, that program does cost $6,500. Too much? Like most things its all relative. It's cheap compared to taking the full-boat curriculum at Invest Tools or Optionetics, which can exceed $20,000. It's expensive if your trading account is $5,000 or $10,000.
Last month I launched what I am calling the "Trading Room." It's not for everyone. I have tried to keep it as affordable as possible, while still offering quality content. It's aim is to provide guidance on how to build and manage a portfolio of income trades. We also get into speculative and trend following trades. The basic focus is on learning how to build and manage a portfolio of options trades, while controlling and managing risk. No rocket science or secret software.
TheOptionClub.com Trading Room
DiscoverOptions lauched a new educational product on covered calls. It's priced at the lower end of the scale and teaches you how to find and manage covered call positions. Sound boring? I've been running covered calls in my wife's IRA, netting between 1% and 3% per month. One nice aspect of this course is that it is focused on one simple strategy that has been working in the current market environment. In fact, I spoke with the guys over there yesterday and they continue to honor our discount code they mentioned during the webinar we hosted.
Video Re-Play of the Discover Covered Calls Webinar
Which one should you take? Take them all or don't take any of them. It all comes down to finding a method or style of trading with which you're comfortable. Personally, I spend money every year to attend seminars or take a trading course of one type or another. The one common denominator is the ability to manage risk and limit losses on trades to a level from which you can recover.
If you find yourself opening trades "hoping" that "this one" will work out....you're probably not there yet. Your focus is still on profits. When you find yourself opening trades, identifying your price risks and your vega risks, noting your plan for adjusting or closing in the event the trade goes against you, checking your planned risk against potential profit to determine whether the reward justifies the risk, then you're getting closer. You're focused on risk and balancing it against reward.
How long does this take to learn?
It takes more than a weekend. It takes more than a few months. It requires a significant committment of time and energy, and some money, to really learn. Is it worth doing? Well, is it worth going to medical school? We could debate that, but suffice to say that if you have an affinity for medicine and caring for people attending medical school may be very worthwhile. If not, perhaps medical school isn't for you. I love this stuff and don't mind spending loads of time on it. Yes, it's worth it to me. You get to decide whether it's worth it to you.
Christopher Smith
TheOptionClub.
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