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Learn To Trade Options: The Benefits of Coaching and Training

In the past if you wanted to learn to trade options you would have to pursue the career of a professional trader. Furthermore options were perceived as either too risky or complex for beginner traders. In fact options trading doesn’t have to be risky and it isn’t hard to learn when you invest in proper training. Trading options the right way is actually less risky than a “Buy & Hold” strategy or trying to trade shares. Here are some of the benefits when you learn to trade options:

Higher Returns

Options offer higher returns compared to trading shares for the same size investment. For example if you had $5,000 and you wanted to invest in company A with a stock price of $50 you could buy 100 shares. If the stock price increased by 10% you would have a profit of $500 (disregarding brokerage and taxes).

Alternatively you could buy call options for company A at a price of $7. The call option has a delta of 70% of the underlying stock price. So in the above example the stock price has increased by $5. Because of the delta of the call option it will increase in value by $5 x 0.70 = $3.50. That’s a 71% gain on the call option, compared to the 10% gain on the stock.

Less Capital Required

Options are perfect for the small trader because there is less initial capital required. For example if you wanted to control 100 shares in Company A mentioned above you would need $5,000 in capital. To achieve the same effect with options you would need to purchase 1 contract which covers 100 shares. If the price of the option is $5 you would only need to invest $500.

Lower Risks

As an options trader you can choose to absorb more or less risk depending on your goals. For risk adverse traders using options can actually be less risky than only trading equities. Buying put options is one of the most common ways to reduce the risk of your equity investments. If your underlying asset declines, then your put options for that stock will increase in value offsetting the loss. You will also have the ability to sell your stock at a guaranteed price. Puts are just one of the ways you can reduce the risk of your equity investments.

The Advantages of Training and Coaching

One of the key reasons that so many beginner option traders fail to make money is because they don’t invest in their education. Here you will learn why purchasing quality training and coaching is one of the best investments you can make in your option trading career.

Reduce Your Chances of Losing Your Money

Trading without proper guidance can be very costly indeed. When you receive options trading and coaching you will learn risk and cash management techniques that will help you to protect your assets. If you do not understand how to use these principles then blowing your entire trading account is a real possibility.

Learn Tactics and Strategies That Work in Today’s Market

Sophisticated trading techniques are difficult to learn from a book. What’s worse is that many of these techniques are out of date by the time you are reading them. While they may have worked ten or even five years ago, they are no longer working in today’s market. When you receive coaching or training you are learning techniques that will work in today.

Proven Track Record of Success

When looking for a training course or coaching you want to look for a proven track record of success. This shows you that the person who is teaching you “walks the walk” and doesn’t just “talk the talk”. Using a system that is proven to be effective is significantly better than applying a simple trial and error approach.

Reduce Your Learning Curve

Every new trader has to go through a learning curve. However if you receive proper training or coaching you can significantly reduce this learning curve and become profitable faster. You will learn how to identify mistakes in your trading and remedy these. If you want to become a profitable trader quickly then there is no better choice than to receive coaching.

Conclusion

If you want to learn how to trade options then finding a quality training course or coach should be your first step. On this site we have in depth reviews of some of the best coaches and option training courses available. Make sure to read these carefully and select the one you think is right for you.

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Warren Stockton
 

Warren Stockton is an options trader and writes reviews on options courses, brokers and strategies.

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