DAY TRADING OPTIONS THE FIRST INVESTORS GUIDE TO KNOW THE SECRETS OF OPTIONS FOR BEGINNERS. LEARN TRADING BASICS TO INCREASE YOUR EARNINGS AND ACQUIRE THE RIGHT MINDSET FOR INVESTING. by ANDREW ELDER

DAY TRADING OPTIONS THE FIRST INVESTORS GUIDE TO KNOW THE SECRETS OF OPTIONS FOR BEGINNERS. LEARN TRADING BASICS TO INCREASE YOUR EARNINGS AND ACQUIRE THE RIGHT MINDSET FOR INVESTING. by ANDREW ELDER

CHAPTER 1:
What Is Options Trading?
There are two significant ways you can trade options. The first
involves buying the option itself and speculating on the price of
the premium. The price of the premium is going to fluctuate based
on how the underlying stock moves so you can profit from these
movements. For example, if you think a stock is going to go up, you can
buy an in the money call, and as the stock rises, the intrinsic value increases
as well. 
Thus, you benefit from the rise in the overall premium value. With a put, as
the stock falls, the intrinsic value of the put rises, and so does its premium.
Remember, you're buying a put to benefit from the price drop (you're not
selling a put). The second method of speculating in options is not to pay as
much attention to the premium but to the underlying. 
What I mean is that you're not concerned with the price rise in the
underlying, you're far more concerned with exercising the option. This
involves an additional step, but if you aim to own the stock, then this could
be a better method for you to deploy. Generally speaking, a lot of options
traders don't bother exercising the contract since the premium tends to
capture the intrinsic value change pretty well. 
Pretty straightforward so far, isn't it? You can swing or day trade options
like common stock, but these methods will need you to develop a
directional bias in the markets. As we've seen, this increases your risk and is
no different from usual trading activity. The point is, you don't need options
to trade this way. So how does one trade option intelligently? 
Well, the best method to do this is to use the structure of the contracts
themselves to isolate yourself from major market risk factors such as
volatility. Often when swing or day trading, traders will use what is called a
stop-loss order to limit their downside. This is a safety net only on paper
since the market is liable to simply jump the stop loss level during times of
high volatility. 
So, the trader is faced with larger than expected losses, and in some cases,
such volatility might wipe out their entire account as well. Options avoid all
this drama since you will only pay the premium upfront, thereby limiting
your initial investment greatly. Then, you will be using ironclad contracts to
protect your downside, and therefore, there is no possibility of the market
jumping the price. Even if it does, your contract specifies the price, so you
will always receive the price as stated on it. 

DAY TRADING OPTIONS THE FIRST INVESTORS GUIDE TO KNOW THE SECRETS OF OPTIONS FOR BEGINNERS. LEARN TRADING BASICS TO INCREASE YOUR EARNINGS AND ACQUIRE THE RIGHT MINDSET FOR INVESTING. by ANDREW ELDER