Options Trading Rules

Here is a list of some rules to follow when getting started with options.

Rule 1
Get educated.
Options behavior differently then stock and have several factors that cause options price changes.

Rule 2
Open a brokerage account that can handle options.
Thinkorswim is best brokerage that specialize in options with risk and reward graph.

Rule 3
Use option simulator software
Optionvue is good but pricey software. Thinkorswim has a integrated simulator with each trading account.

Rule 4
Paper trade first.
This is the best way to learn with fake money before you put real money to work. Practice makes perfect.

Rule 5
Set your profit and loss target.
Have an idea of when to exit the trade is very important. Never get into a trade just to get in. Have a stop loss or adjustment plan ready at all times.

Rule 6
Trade small, trade often.
Don't put all your eggs in one basket. Keep each trade small and spread it around among different options/ strategies.

Rule 7
Understand a strategy inside and out.
Learn a strategy and dissect piece by piece to understand what factors go into making the strategy work. Only then will you know when and how to apply the strategy and make it generate a consistent return.