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A profit machine for trading options has a lot of moving parts. The first challenge new traders face is getting their heads around the fundamentals of how option contracts work. You can find a lot of places online that explain the basics of calls and puts, option spreads, and how options are priced. A lot of it will seem impenetrable. I found that the best written and most accurate information was available online through my brokerage account. Although I’m not going to recommend any particular brokerage firm or information source, I will share the sources that helped me get the basics, and I will list them in the sidebar of this blog. I opened an account at TD Ameritrade, where I continue to explore lessons, articles, and webcasts. Even without a TD Ameritrade account, you can view their webcasts. I used $50 dollars to open an account there, and gained access to a lot more–data, interactive courses, and their trading platform Thinkorswim(TOS). I loaded TOS on my PC, and discovered a bewildering, but powerful, application that supports live trading with real money as well as pretend trading, which they call a paper account. Although I’ve used TOS for over a year, I still learn new things about what it can do. Learning to use a trading platform is important, but there’s a lot more to trading options than just pointing and clicking. Still pointing and clicking is where I began. Another resource I used was Investopedia, which has many understandable articles on various aspects of trading. I also learned from Option Alpha, which offers a very specific approach to trading options that is worth consideration. In the end though, as I learned more about how option pricing works and became more knowledgeable about the underlying stocks and exchanges traded funds (ETFs), I developed my own unique approach.
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