Advancing from Stocks to Options Trading - Paperback

by Russell A. Stultz (Author)

I wrote this book for friends and family members who are familiar with the financial success I've achieved over the years through trading options. The book's goal is to explain how the options market works and how to choose the best option strategies for current market conditions. In addition to learning what happens when put and call options are either bought, sold, or bought and sold, it describes how to use the simple options math available on option trading tables, called option chains. Option chains are described in detail within this book. Learning how to use the available data on an option chain is essential to setting up an option trade in order to achieve a profitable outcome.

For a fraction of the cost, options traders can achieve several times more income than stock traders for a fraction of the cost. Referred to as financial leverage, this is a major reason that options trading volume has experienced increases that are substantially greater than that of any other market trading venue.

The book describes how to choose a brokerage and open a brokerage account. Readers are also introduced to "watch lists" comprised of affordable stocks and ETFs that fit each trader's account size. It describes how price charts are used to determine underlying market conditions. The ability to determine a directional price move is key. A major benefit available to options traders is how options strategies exist that work in every market condition, i.e., bullish, bearish, or neutral. Readers are shown how to take advantage of the underlying market conditions once a candidate stock or ETF is found.

A variety of popular "rules-based" option trades are described in detail. Option trading rules determine the best time to sell or buy either a single option or a "spread," which combines two or more option positions. These rules also consider option expiration dates, the current measure of market volatility, and more. Readers are shown how to use these option metrics to set up high-probability outcome trades of their own.

Finally, readers are shown how to manage their working option trades. This can include setting profit targets and protective stops, rolling working trades to later expiration dates, or reconfiguring a working option strategy by legging into another option strategy setup.