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What is Options Trading?

Most people have been involved in the stock market at some point, usually with buying and holding stock. Options are contracts that grant the right but not the obligation to buy or sell a stock or other asset at a set price on or before a certain date. The right to buy is called a call option, and the right to sell is called a put option.

Now most people have heard of options trading, but usually it’s stuff like, options are too risky, they’re dangerous, they’re too difficult to understand, they don’t work, 90% expire worthless, options are the cause of stock market crashes, and it goes on and one, but it’s not actually true.

Most of the time, these sayings come from people who possibly read a book, watched youtube, or heard from a friend. The problem is that learning options trading is just like learning a musical instrument, and it’s hard to learn how to play a musical instrument well from a book, youtube, or hearing a friend try to explain it to you. The best way to learn is one on one teaching from an expert, and practice, practice, practice.

There are strategies and techniques to options trading. Ways to increase your probability of success and manage your risk. Most of the people who fail at options trading fail because they don’t have any experience, they buy to open a call or put, they don’t know how many contracts to trade, they don’t know when to exit, their position size is too large, or they don’t trade often enough so they end up blowing up their account within 3 months. Having the right strategy, for the right stock at the right time, takes knowledge, practice, and the ability to stick to the rules of a strategy without getting swayed by emotion. There is always a right strategy, no matter the market, bullish, bearish, or neutral. It’s about knowing which strategy is best for each individual trade.

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