Options trading is a popular way to participate in the stock markets without actually purchasing stocks. Instead you are purchasing a contract, which will allow you to purchase the stock at a specific price should you choose to. The main advantage that trading options has is that it requires a lot less money than dealing in the actual stock. The drawback is that it is more complicated.
Find an options trading website that gives free lessons. A few that you might consider using are Optiontradingpedia, Investopedia and Learn Stock Options Trading. These sites will teach you about time value, intrinsic value and how to choose a strike price (the price at which an option can be exercised). In addition, they will teach you about the dozens of strategies available when trading options, such as strangles, straddles and covered calls.
Get a simulator. Although you can learn a lot by reading and studying there are some lessons that can only be learned by trading. Thus you will need a simulator that will create an environment similar to what you will experience while trading. You can find a free options simulator at Investopedia.
Learn on the forums. Another good way to learn options is trading is through trading forums. A couple that you can consider are Trade2Win, Investopedia and EliteTrader. These forums will give you a venue where you can ask questions. Also, some traders post trading journals you can follow along with. They will often list the factors and indicators they are using to make their decisions.
Palmer Owyoung holds a Master of Arts in international business from the University of California at San Diego and a Bachelor of Arts in sociology from the University of California at Santa Barbara and is a trained molecular biologist. He has been a freelance writer since 2006. In addition to writing, he is a full-time Forex trader and Internet marketer.