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Options can be a powerful trading tool when used in the proper manner. They can be used as a source of regular income, or as a way of hedging a portfolio. However, they are also complex types of security that can be difficult to understand.

Knowledge is power and nothing will serve you better than information when it comes to options trading. More than anything, you must have a clear understanding of what the risks of options trading are, because only then can you get a handle on what to expect and target in terms of returns.

The internet and eBook technology has provided investors with hundreds of resources, but along with volume comes a variance in quality. You must do research when assessing if a source of options information is legitimate or not. Investigate any resource and be sure that the information they are providing is both accurate and in your best interests (rather than their). Also, look for experts and advisers who actually use their own strategies, and even their own capital, when promoting their strategies.

One resource you certainly will never need: an expensive seminar. Options can indeed be complex, but the plethora of free or inexpensive resources available in books or websites makes paying hundreds or thousands of dollars for a class unnecessary.

Here are several resources available to help investors learn about options.

Cashing in on Covered Calls. Investing with Stock Options by Alan Ellman and Barbara Karnes. This eBook's value lies in its detailed discussion of the most popular type of option trade. It provides step-by-step strategies for both finding the best stocks to write covered calls against, as well as when close out one's position.

Understanding Options by Michael Sincere. Another eBook that is primarily for the beginner, but also offers up a few advanced lessons and uncommon advice. The book has 44 four and five-star reviews on Amazon out of 47 total, with many reviewers evaluating the book's content.

Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks by W. Edward Olmstead. This terrific eBook is useful wherever one is a seasoned trader or just starting to learn about options. The prose is concise and easily understood, and provides practical lessons on things like controlling risk. Also, whereas most books tend to focus on covered calls, this book goes into great detail on advanced topics known as the Black-Scholes formula, delta-neutral trading, and how to use vertical spreads. There is also an important lesson on how to integrate tax considerations into your options trading , something most books ignore.

Option Trading in Your Time Time: A Guide to Financial Independence for Women by Wendy Kirkland and Virginia McCullough is a terrific book that focuses on providing women tools to augment their household income using options. Written by women for women, it empowers women who have never set foot in the world of investing by teaching some of the basic strategies for covered calls and selling puts. The prose is concise and easy to understand and makes an excellent starting point for newbies.

Volatile Markets Made Easy: Trading Stocks and Options for Increased Profit by Guy Cohen. This book is structured like a class, with specific emphasis on using chart patterns to help investors identify the best risk-reward scenarios for trading options. The book also provides specific and detailed information on using more complex trades that depend on market volatility, such as straddles and strangles, and compares them to very advanced topics like ratio-backspreads. His ability to instruct investors on managing risk is extremely useful, as he shows how to take profits off the table while still leaving room for a potential home run trade if certain circumstances come to pass.

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Source by Danielle D Taylor