re: Options Trading Thread

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I’m interested in learning about options trading. I know almost nothing now but I’ve read that covered calls of stocks you already own are a good place to start.

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I think the first thing you’d want to ask yourself is what type of investor are you and what are your goals? As you’re getting approved for different levels of options trading, those types of questions will be in the questionnaire or asked by a brokerage rep. So if you’re a conservative investor with a primary goal of capital preservation, you’ll likely only be approved at the base or Level 1: Covered Calls & Cash-Secured Puts.

Most people do start out by writing covered calls, then on to cash secured puts. Those trades only require a basic approval designation and you wouldn’t necessarily have to have margin approval (as you can even write those contracts in a tax advantaged account).

Different brokerages have different terminologies and standards. But Level 2 is typically what’s needed to buy or go long options.

What I would suggest is that you read, read and then read some more (legit YouTube sources like TastyTrade and Options Alpha are also good). Then paper trade to learn the mechanics of entering and exiting trades. People who suggest that you should just jump in and give it a whirl are leading you to an accident on the highway.

I don’t paint myself as a know it all expert by any stretch. But I’m a full time index options trader now, though on occasion I still trade small lots of equity options in a non-business account. I’m not an advisor, but I, along with the other folks here, would be happy to help you on your journey however we can.