How To Learn Options Trading - Tips & Resources
The word option is derived from stocks means whose value depends upon the underlying stock. Option trading allows you to buy or sell stocks at a particular price within a specific date. In option trading buyers has the opportunity to buy or sell the underlying assets depending upon the type of contract they have. Each contract will have an expiration date by which the holder can hold their position.
There are the 2 ways to learn Option trading-
• First learn the basics of Option trading.
• Apply your basic learning/knowledge in the real market.
What are the topics you need to learn in Option trading?
1. What is Option?
2. Benefits & Risks in Options Trading
3. What are Call & Put in Options Trading?
4. What are the different types of Options like Stock Options, Index Options, Commodity, and Currency Options?
5. What are the components of an Options contract like strike price, lot size, expiry date, premium etc.
6. What are the factors influencing Option premium?
7. What are Option Greeks?
8. Options chain?
9. How are Call & Put Options settled?
10. How we can place order in options?
How to Learn The Basics of Options Trading?
There are the following different ways of learning the basics of option trading-
1. Online Resources - As in today’s era everything is available online it becomes easy to learn or understanding the option trading through websites, YouTube. As YouTube is also a very huge and vast platform to learn the basics of Options. There are several videos available from experts and stock broking companies that helps you to learn the option trading.
2. Books - There is natural way of learning the option trading called Book reading, is it one of the great ways to master the basics of Option trading. There are many trading books available on Amazon and Flipkart that will helps to learn excellent trading in Options.
3. Online courses - You can also go with online courses if u want to learn option trading in a structured way. Some of the stock brokers are also providing the online courses. You can check it online or can contact to the broker if already have a de-mat account.
How to Apply your Learnings in Real Market?
Now it’s time to take actions on real market by using your learnings and knowledge.
1. Option Trading - For this you need to have a trading or de-mat account linked with your saving account. If you already have a trading or de-mat account then check with your broker that you can trade in options or not in your account.
2. Planning for trade - You need to update yourself through business websites and newspapers to understand the current market environment. Setup your trade that what option will you buy at what position.
3. User friendly trading platform - There are the 3 versions of trading platform provided by the broker installable, website and mobile app start with the easiest one and then move to another version based on your understanding.
4. Small investment - In starting you need to trade with small amount rather than a big amount your focus should be on trading and learning then profit making. You can start with index options and then move to stock options.
5. Option strategies - After trading with single position like buying a call/put option you can move to taking 2,3,4 positions with different option strategy.
Also Read: Options Pricing - Key Factors & Impact
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