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Epsilon Options

Options Trading Education

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The Best Way To Learn Options Trading

The best way to learn options trading is by combining learning and doing. Learn the principles and theory, and then practice as much as possible.

Here’s the process in more detail:


1. Learn Options Principles & Theory

Options trading is a complicated beast, and it pays to know as much as possible about the basics before trading for yourself.

That may seem a little daunting, but there is some work to be done before you can confidently, and competently, trade options for real.

options gamma math
Learning Options can be complex….

Thankfully we can help on this.

We’ve created all the info you need to trade option and suggest you go through the following post to get yourself up to speed on the basics:

Start with our post on How Options Work: Trading Put & Call Options which will give you the basics on the two option building blocks: puts and calls.

Then we suggest you learn how you might combine trades in two or more options to create an options spread: Options Spreads: Put & Call Combination Strategies.

And then perhaps become familiar with some of the more basic options spreads such as a Covered Call, Calendar Spread or Iron Condor.

Finally you might familiarise yourself with some of the key options terms such as Implied Volatility and the Greeks.

There are also some excellent videos on youtube to watch. here are some we recommend:

The Best Ways To Learn Options Trading Videos:


2. Options Paper Trading

The next step is to do some options trading yourself, but without risking any cash.

You can do this this ‘paper trading’ as its called on several of the popular options brokers’ sites.

These brokers allow you to load up a dummy account with fake ‘money’ and trade the market – all at no risk. You’ll get all the functionality of their platform, without risking any hard cash.

This is a great way to practice trades and finesse your strategies before risking any capital.

It’s also a good way to try out the various brokers to see which you prefer.

Here are our choices:

Interactive Brokers:

Interactive Brokers offers a full paper trading service for new customers. You’ll have to sign up for an account first (at no cost) and then go to Manage Account >Settings >Paper Trading .

(See here for more info.)

The best thing is you’ll get full access to IB’s great tools:

Best Way To Learn Options Trading - PaperTrader
IB’s Tools

TD Ameritrade

TD Ameritrade

TD Ameritrade has a great trading simulation environment called paperMoney.

See here for more info.


3. Trade (Slowly) For Real

Once you’ve found a style which, on paper, works and a platform you prefer it’s time to trade using real money.

Start slowly with money you can afford to lose. Indeed once you’ve loaded it into the platform treat it as gone to remove as much emotion from your trading as possible.

You’ll find that even with the above measures, trading with real money is very different to using paper money to practice.

In particular you’ll learn how to enter a trade properly – ie how to price a trade using the buy sell options prices – which is difficult to simulate with paper money.


Once you’ve been through these learning stages you can gradually increase the amount of dollars you have at risk.

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Further Reading On Options Trading...

Calendar Spread

The Calendar Spreads Options Strategy What is a Calendar Spread? Intro Calendar Spreads are one of the key non-directional strategies used by options traders to make money in any market ...
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Covered Calls Options Strategy Guide

Introduction To Covered Calls Covered calls have always been a popular options strategy. Indeed for many traders, their introduction to options trading is a covered call used to augment income ...
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Implied Volatility

What Is Implied Volatility? Implied volatility (IV) is one of the most important concepts in options trading. Unfortunately it’s also one of the most complex. Therefore, let’s build up the ...
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How To Learn Stock Options Trading: Stock Options For ‘Dummies’

Would you like to learn stock options trading but don't know where to start? Well we've got your back and designed this step by step guide on how to educate ...
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Options Trading Strategy: Long Call

A long call option strategy is the purchase of a call option in the expectation of the underlying stock rising. It is delta and theta positive. Introduction Options can provide ...
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Volatility Skewness | IV Skew In Options

Volatility skewness, or just skew, describes the difference between observed implied volatility with in-the-money, out-of-the-money, and at-the-money options with the same expiry date and underlying. It occurs due to market ...
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Vertical Spread Options Strategy: Definition And Examples

What Is A Vertical Spread?: Definition A vertical options spread is a combination of bought or sold options of the same underlying security and expiry date (but different strike prices) ...
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Out Of The Money (OTM) Options Explained

Out of the money (OTM) options: where the exercise price for a call is more than the current underlying security’s price (or less for a put). This is an example ...
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Put Call Parity

Put Call Parity Introduction Options trading can be relatively simple and can also become highly technical. One of the most important basic concepts when it comes to trading options is ...
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The Synthetic Covered Call Options Strategy Explained

What Is A Synthetic Option Strategy? A synthetic covered call is an options position equivalent to the covered call strategy (sold call options over an owned stock). It consists of ...
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Covered Call LEAPs | Using Long Dated Options In A Covered Call Write

The 'Covered Call LEAPs' options strategy is a capital efficient alternative to the more traditional Covered Call, replacing the owned stock with a LEAP call option. What's A Covered Call? ...
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Options Delta Explained: Sensitivity To Price

Options Delta is the measure of an option’s price sensitivity to the underlying stock or security’s market price. It is the expected change in options price with a 1c change ...
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Straddle Spread: Learn This Options Trading Strategy

Options Trading Strategy: Straddle Spread Introduction The straddle spread is a relatively simple options strategy that can be used under different market scenarios. However its most normal use is a ...
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Buy to Open vs Buy to Close

What is Buy to Open vs Buy to Close? We look at these two similar, but not exactly the same, concepts. (We have similar post on the opposite trade: Sell ...
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Options Brokers Reviews

How To Choose The Best Options Broker There are several things an option trader needs to look for in an options broker. However, whilst most traders will need most, if ...
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Featured Posts:

Options Spreads: Put & Call Combination Strategies

Protective Put: This Defensive Put Option Strategy Explained

Options Greeks: Theta, Gamma, Delta, Vega And Rho

How To Learn Stock Options Trading: Stock Options For ‘Dummies’

LEAP Options Explained: What Are They And How Do They Work?

Options Trading Strategy: Butterfly Spread

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