Trading Level 1 Introduction to Options

Example:

• The possible payoff of options can make them very appealing – even seductive – for many investors.
• Those potential returns come from leverage.
• That leverage can also bring greater risk.

A ten percent increase in the underlying asset can potentially double your money in the options market. On the other hand, a ten percent loss in the underlying asset and you could go broke. Too many amateur investors or beginning traders do not take enough time to think about the potential downside before jumping in with leverage.
In the end it is all about control and choice. By having knowledge of options we are no longer limited to the buy and hope strategy. We can now make money in any type of market situation. We can be very aggressive or we can be conservative depending on our investing personality and objectives. There are several strategies you can implement with options. They can be broken down into basically two groups: trading strategies and investing strategies. Since the primary focus here will be on investing strategies, let's take a look at the breakdowns to get the big picture.

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Trading Level 1

• Introduction to Options
• Background of an Option
• What is an Option?
• Option Definitions & Diversification
• Option Basics
• Options Trading Rules
• Options Trading Authority
• Finding an Option to Trade
• Reading an Option Quote Screen
• Placing an Option Order
• Options Level 1 Quiz

Trading Level 2 Trading Level 3 Options level 4

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