How do you rate options success trading package?

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Options are risky. They are a leveraging and hedging tool. Options are offered on all types of stocks and indices. CBOT standardized options in the early 70’s to be 100 shares per contract (if my memory is correct), which means for each call or put contract you have a 100:1 leverage on your money. Options expire the third Friday of each month and progressively lose their future value as they approach the expiration date. The type of options I will write about here are basic puts & calls exchange traded options.

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  Step 2
  Option Trading Rules. What I mean here by trading rules are your own trading rules. The primary rule I would suggest is to set a financial maximum per trade and an overall limit to the funds you allow yourself to trade (over a fixed time period). This may reduce the amount of money you make when you are successful but can limit your loses when you are not so successful. You have to come up with your own pain threshold, but once you do, stick to it.
  * Another rule I would suggest comes from experience and may not be so obvious right away to the novice options trader. Limit the amount of options you buy and sell each day to a manageable number. I would suggest no more than about 10 options if you are trading part time. (And maybe upwards of 20 options if you have more time to spend on the markets during the day.) If you are in and out of options contracts in one to three weeks these limits should be a good starting point.
  * A hard learned rule that I would suggest you think about in some detail is to set a minimum profit % you are willing to take before exiting the option. This is a “don’t be greedy” rule. With a lot of options returning 2-10 times their original investment it is tempting to wait for a meaty return. I have lost a lot of money this way. In the end you may wish to be happy with a 25 or 50% return on your trade. And if you are in and out of trades in 2 to 4 weeks, you are still doing well. This also ties in with the when to get out rule, that you should consider. If your trade does not go as planned take the loss right away and don’t wait to see if it will recover. Your downside risk is usually greater. If you find you have to take a loss too often re-evaluate your trading strategy (the markets may have changed and could require a new approach).
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  Step 3
  Option Price Movement. Study the options you are interested in for a little while before buying them. Note how their prices vary during the trading day. For options on stocks you may notice that on some days the in-the-money option contracts don’t seem to track the stock price like it has on other days. I won’t speculate as to why this happens but it can be frustrating when you are trying to enter or exit a trade. These events don’t happen that often and may coincide with heavy overall market activity.
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  Step 4
  Option Plays. Try not to buy out-of-the-money options within a week or two of expiration. I like to start getting out of my option positions at about two weeks out. Unless you have inside information, you are taking a big chance buying out-of-the-money contracts too near expiration. Buying in-the-money contracts are safer but realize their future value content is falling fast. Unless you plan on exercising the option try to get out at the next best opportunity.
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  Step 5
  Options Trading Strategies. I have employed cyclic, earnings and dead cat bounce trading strategies with options and have had some success. Cyclic trades use some technical charting analysis to determine entry and exit points for the trade. Earnings based trades may be a little bit less risky as long as you get a good price before the options moves from the news. (Straddles may work here too but I have been burned too many times with them not moving at all in either directions with the news.) And dead cat bounce trades with options can be really risky. The dead-cat-bounce could happen too late to offload your option with a profit. And if the dead-cat-bounce does not happen at all, more than likely your options will expire worthless (if the contracts moved out-of-the-money or were never in-the-money).

Options trade differently than stocks. Understanding their behavior and following a few .

Within an option trade, the traders purchase the possibility to make a future exchange of currencies, at a previously established rate (strike). A premium constitutes the payment for that option, which is calculated by various variables, such as the established exchange rate, and it is measured in percentage.
Main types of options:
Call Option – a contract which gives the trader the right to purchase the currency at an established rate and time.  
Put Option – a contract which gives the trader the right to sell the currency at an established rate and time. If the other side executes the option, the seller must purchase the base currency.

Options trading is an incredibly complicated and complex vehicle for making money, and should be treated with respect by investors. It’s not for the timid or the inexperienced. To select the right options trading strategy, you need competent, credible and relevant advice from people who know what they’re doing.

A qualified options trading site can:

• Guide you through the basics of options trading, and keep you from making dangerous rookie mistakes.
• Explain how puts and calls work and show you how to use them to your financial advantage.
• Teach you about long term options (LEAPS) and how you can maximize your investments by using them.
• Walk you through how investors use options to speculate and hedge their risks.

Options trading isn’t for all investors, but folks who have the discipline and skill to master this exciting way of making money can realize big profits if they start out with the right advice.

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Effective Trading Strategies