Writing options means we are sellers of an options contract, which can be risky under some circumstances, but not with covered calls. In fact, covered call writing is probably the most conservative options-writing strategy because the contract you write is backed by your ownership of the underlying stock. Let’s say you own 500 shares of a highly liquid blue chip stock like Microsoft. Microsoft isn’t very volatile and that makes it an ideal candidate for covered call writing. It’s a good idea to write calls on stocks that aren’t very volatile because we’re going to write out-of-the-money calls and collect some income in the form of a premium for doing so. Say Microsoft is trading at $23. We might write calls on the $25 strike for the next month’s contract. The risk here is that if the underlying stock rises above the strike price before expiration, the buyer of the call can call our stock away at $25, which is a discount to the market price. Now you see why you have to own the stock you’re writing covered calls on and why you want to select stocks that are range-bound. As a rule of thumb, you would write one call contract for every 100 shares of the underlying you own.

Another fairly conservative options strategy is the married put trade. Married puts are a lot like covered calls in that you already own the underlying stock and you’ll buy an amount of puts equivalent to the number shares you own. Here, you’ll be long on the puts, but since you own the underlying stock, the puts act as a hedge. In other words, they give you a way to make money if the stock declines.

There are several different options strategies known as spreads. One of the more basic ones is the bull call spread. In this trade, you buy calls at one strike price and then sell the same amount of calls at a higher strike price. So if you bought five Microsoft 25 calls, you might sell five Microsoft 27.50 or 30 calls. The contracts have to have the same expiration month and underlying security for the trade to be considered a bull call spread. This is a bullish strategy.

The bearish cousin of the bull call is the bear put spread. Here you’ll buy puts at one strike price and then sell the same amount of puts at a LOWER strike price. Both strategies limit gains, but they also limit losses.

As you can see, a lot of options strategies offer protection to investors. Another one of these trades is the protective collar. With a protective collar, you’ll purchase an out-of-the-money put option and write (or sell) an out-of-the-money call option on the same security. This strategy is used by investors that have already gotten substantial appreciation from the underlying security as a way of locking in profits.

Got a feeling that a stock is about to make a big move, but you’re not sure what way the move is going to go? That’s OK because you buy both a put and call with the same strike price and expiration on the same security. This is known as the long straddle and positions you perfectly to profit from a big move in the underlying, regardless of the direction.

A related strategy is the long strangle, but there’s a twist with this trade. With a long strangle, you’ll buy a put and a call on the same security with same expiration date, but with different strike prices. A strangle is usually a little cheaper than a straddle because you’ll be buying out-of-the-money contracts. And with both long straddles and strangles, your loss is limited to the cost paid to enter the trade.

The butterfly spread is an advanced options strategy that may seem confusing to the novice options investor. In a butterfly spread, we combine bullish and bearish spreads using three different strike prices. An example of a butterfly spread would include buying one put or call at the lowest or highest available strike price, then purchasing two of whatever we didn’t purchase in the first leg at higher or lower strike prices and then one final put or call at a lower of higher strike. Let’s try to make this easy to understand. Buy one call, buy two puts, then add another call. Voila, there’s your butterfly spread.

Another unique options strategy that is geared more to experienced options traders is the iron condor. The iron condor is risky and complex because you simultaneously hold a long and short position in two different strangles. This is the type of trade you need to research before randomly committing money to it.

And our final options trade that we think you ought to know is another butterfly. The iron butterfly allows investors to combine a long or short straddle with the purchase or sale of a strangle. With the iron butterfly we use both puts AND calls, not one or the other. Using out-of-the-money options is advisable to keep costs and risks to a minimum.

In conjunction with the release of Wizetrade for Options, GlobalTec also released an upgraded version of Option Hunter software, its premier scanning tool for options traders. Option Hunter searches thousands of stocks, and tens of thousands of options in seconds, returning only those stock and option candidates that meet the user’s trade style and parameters. These candidates are then plugged into Wizetrade for Options for further chart evaluation.

Based on a patent-pending proprietary algorithm, Wizetrade for Options charts the real-time buying and selling pressures through green and red lines in five time frames that are fully customizable to individual trade styles.

“The key to trading successfully is being consistent, finding something that works, and then repeating the process over and over again,” said John Larsen, product president of Wizetrade for Options. “These two pieces of software help you do that by combining state-of-the-art functionality with an easy to navigate interface that is fully customizable to any individual trade style and risk tolerance.

Using Wizetrade for Options, any options trader can:

1) Track up to 15 stocks at any given time: Build custom baskets of Exchange-Traded Funds, cash indexes or large Cap, mid cap and small cap stocks that can easily be loaded to the Overview Screen with a click of the mouse. The number of baskets is unlimited.

2) Easily filter and sort options chains: In seconds, Wizetrade for Options can help determine which option or combination of options best fit the end-user’s trade style and custom parameters.

3) Manage trades efficiently: The end-user will see at a glance open positions, pending orders, completed transactions and account equity all from within the Trade Manager. Enter equity, options, equities with options, spreads and straddles and strangles with a few mouse clicks.

4) Calculate Risk with ease: Determining entry calculations, stop losses, profit targets, risk to reward ratios and account allocation has been simplified—Wizetrade for Options calculates the numbers for the end-user.

5) Instantly find news: A Calendar feature not only shows what stocks have earnings announcements, stock splits or conference calls coming up, it also allows you to type in any symbol and immediately see vital company information that could impact trades.

6) Trade Journaling: End-user will be able to document each trade with one click, enabling a trader to instantly capture the real-time data and all five charts, underlying market conditions and option chain specifics to store for future reference.

7) Trade live through an integrated broker: Wizetrade for Options is fully integrated with optionsXpress (NASDAQ: OXPS), a leading online brokerage—meaning it is not necessary to leave the software to submit orders. Easily switch from paper trade (practice mode) to live mode with the click of a mouse.

Wizetrade for Options is the latest addition to a full line of cutting edge trend recognition software produced by Dallas-based GlobalTec, a nationally recognized investor training organization and provider of software, trading tools and training for individual investors. This product suite includes Wizetrade, 4X Made Easy, Commodity Explorer and CommandTRADE.

Option Hunter software includes customizable alerts that trigger when trade parameters have been met, a Scan Builder Wizard for constructing custom scans and the capability to customize scan results.

Spot Trading – Spot trading in the Forex trading system is what is termed Forex. A Forex currency trade is a simple simultaneous transaction that involves the exchange of one currency for another. Forex currency trades may be settled within 2 days, except in Canada where exchanges may be settled within one-day.

There are two parties and two positions with any trade. The party who delivers a commodity holds a short position. The party who receives the delivered commodity holds a long position. In other words, the seller holds the short position and the buyer holds the long position. There are no restrictions and limitations in Forex spot trading as long as there are parties willing to a trade and liquidity in the currencies being traded. Spot trades incur a transaction charge per trade called a margin or spread. A margin is calculated as the difference between the current bid price and the asking price.

Forwards Trading – A forwards trade is a trade in which the traded commodity has a date of delivery some time in the future. Typically, a forward contract may have a date of delivery one, two, three, six or twelve months into the future. Traders use forwards to take advantage of interest rate differences between countries and this difference is usually factored into the cost of a forwards trade. The value of a forward is determined by the difference in interest rates offered by the countries whose currency is involved in the trade. The cost of a forward may be higher or lower than the current spot price of a currency. When a higher price is charged for a forward, it is called a premium while a lower price is a discount.

Futures Trading – A futures trade is similar to a forward trade where a buyer and seller trade currencies for a predetermined price, at some time in the future. The difference between a futures and forward trade is that futures are traded on a regulated exchange and forwards are not. Futures trades incur round-turn commissions that are generally higher than the margins required for spot trading. You must make a deposit on futures to serve as a margin or bond for the trade. If market events indicate that a currency will increase in value over the term of a future, a lower price will have more worth when it is traded. The difference between the price for a future and the market price of currency is added or subtracted from the margin value. You must replenish any loss in margin in order to continue to hold a position in the trade.

Options Trading – Options are a form of currency trading where you are given the option to buy a specific amount of currency before a specified date. Options differ form forwards and futures because options give you the right to buy or not buy. Generally, traders will seek options when there is an indication of stability in currency exchange rates while speculators may assume the risk in hopes of making a profit. As a buyer, you are required to pay a premium for options and that premium is forfeited if you fail to exercise the option. Premium prices are established based upon how likely the market perceives that the option will be exercised. Premiums may be calculated as the difference between the current spot price and a future strike price or they may be involve more complex calculations, based on market conditions and the timeframe before the expiry date.

Options include both a call and a put. The right to buy currency is a call option while the right to sell currency is put option. The option to buy US dollars and sell Japanese yen, for example, is a yen call and dollar put. The price that the buyer agrees to pay is called the strike price or exercise price and the amount of currency that may be bought or sold is called the principal. Options may be purchased on an exchange or over-the-counter and then bought and resold. US style options are purchased on an exchange and have a strike price, expiry date and contract size. Options bought over-the-counter are bought in interbank. Options offered in the interbank market are usually European style options where the terms of the contract are negotiated between the seller and buyer.

Swaps – A swap is a combination of a spot and forwards trade. A swap involves the trade of currency on a specified date and an agreement to trade it back at a later date. A swap provides you with an alternative to borrowing foreign currency. If you need liquidity in a currency, you may swap for the needed currency. This involves a spot transaction to initiate a trade and a forward transaction to buy back the currency in the future. Large banks and corporations tend to favor swaps. Individual investors rarely engage in swaps.

There is indeed a very BIG difference. I used to search for options strategies all the time as I thought it will make me a better trader. But does it really help a trader to trade better?

My answer is Yes (30%) and No (70%). Most “options strategies” searches (both online or offline) normally lead to what I call the textbook strategies. Textbook strategies are those that you can find in the books from any bookstores or even FREE online. In case you do not know, there are more than 50 types of textbook options strategies in the market. They are like the “straddles, strangles, butterfly spread, calendar spreads, iron condor and whatsoever”.

The answer was a 30% Yes because it may help you adjust your trades at times and 70% No because in most cases, you don’t need them.

In the past, I used to want to know all the strategies but after mastering the 26th, I stopped. Because I start to realise that I use less than 5 of them to profit from the market. And the best part is, most of my trades are purely based on buying calls and puts contracts.

Whenever people ask, “if you are only trading calls and puts, why don’t you just stick to stocks?” And the questions usually come from the people who know many textbook strategies. But my answer is always simple. “Options trading offer me the leverage and flexibility that stocks cannot provide.”

And for me, I chose not to focus on all these textbook strategies and instead focus on real options strategies.

What are real options strategies? In another words, it is analysis. I prefer to just stick to the simple buy call and put contracts rather than to perform a complicated trade and end up paying more commission (although it is cheap).

I focus on studying the market movement, when to enter and when to exit. And once I have identify when to enter, I will just buy a call if I believe the market will continue going up or buy a put otherwise.

This way, I keep my trading as simple as possible so that I can use the rest of my time to accompany my loved ones. Isn’t that why you picked up or plan to pick up trading for? If yes, then keep things simple!

However, I am not asking you to just know how to buy calls and puts. There are some textbook strategies that will be useful for you and you may want to read on and understand. Those that I believe are useful are the spreads.

If you do not know what they are, go grab any options trading book and study debit and credit spreads. It will be useful for you if you wish to be on the road of options trading.

Remember; keep trading as simple as possible.

If you are in search for a real options strategy to add into your arsenal, then I recommend you my book, Huge Profits Options Trading with Simple Analysis.

This is a no nonsense or textbook strategy book. All the information presented in this book is about sharing with you how to study the market, when to enter and when to exit and take profits. Whether you are into stock or stock options trading, this book is for you.

Go to my website, www.BuyLowSellHighTips.com to witness the extraordinary stock options trading ebook that was personally written by me.

There are any number of reasons why a trader hesitates before a trade.  The main one is lack of planning.  Without a plan, there is no degree of confidence a trade will be successful, it’s all wishful thinking. Unless they are outright gamblers, traders usually have a strong need to protect their assets and avoid risk. This is especially true for beginning traders. It can take a long time to build up sufficient capital for serious trading. By that I mean sufficient capital to be able to trade for a living. It is quite understandable to fear losing all or part of your initial capital. Beginners tend to seek absolute certainty before taking a risk, and gaining true confidence in you ability to trade successfully can take time. Unscrupulous marketers of mechanical trading systems and methods take advantage of the beginners fears and lack of confidence by advertising “sure-fire” “magic” ways to trade, instead of revealing the truth about the difficulties in becoming a consistently successful trader.

When it comes to short term trading, there isn’t very much time for long deliberations. Market conditions are in continuous flux. Decisions need to be made relatively quickly, and if one waits too long to execute a trade, he or she may miss a significant opportunity. The reasons for hesitation are everywhere, and traders must be aware of them, and create a plan to prevent them.  Let’s look at a few of the things that cause traders to hesitate:

The complex charting software available these days tends to increase hesitation.  Traders think that the more confirmation they can get from indicators, the more certain they can be that a trade will be successful.  However, all indicators lag the market. The notion that an indicator can somehow predict what will happen once a trade is entered is nothing more than wishful thinking. An indicator may give some degree of confidence about entering a trade, but the indicator cannot trade the trade, only the trader can do that. Once a trade is entered, it becomes entirely a process of management. It’s tempting to look at as many indicators and signals as possible. Doing so, however, can be very time consuming. That’s why seasoned traders advise looking at only a few if any key indicators.

Hesitation is often related to a lack of confidence in the trader’s trading strategy or trading ability. There are numerous reasons for such lack of confidence. Some of the reasons are shallow and mostly on the surface, like being distracted by watching financial TV while trading.  Other reasons are more deep-seated, and actually reflect psychological problems dating all the way back to early childhood.  A trader may not believe that his or her trading plan is adequately developed.  Nevertheless, they are determined to trade, so they muster up their courage and finally jump into a trade almost guaranteeing that the outcome will be a matter of pure chance.  Some traders may question their trading plan because they know that they did not spend enough time preparing it. Sometimes hesitation is intuitive, warning the trader to avoid the trade. All too often, traders are not tuned into their own intuitive feelings.  In the case of intuition, hesitation can act as a motivator. If the trader feels the hesitation is because of lack of adequate preparation, then that trader must learn to spend more time preparing for trades. By studying the markets a trader can come to see new higher probability setups, thereby reducing doubt and indecision, and in turn stop the hesitation because of more adequate preparation.

Hesitation sometimes reflects a deep desire to be right and a fear of being wrong. It has been our experience that many of the people who are attracted to trading fit into this category.  Great care must be taken by physicians, engineers, scientific types, and mathematicians, who seem to be the most prone to this type of hesitation. They are often perfectionists afraid to face their inadequacies. By putting off a decision, they don’t have to face their limitations, and can pretend they are better traders than they really are. If I had the time and space, I could give you dozens of examples of this kind of hesitation.  The perfectionist’s reality states that everything must be in order and follow rules.  They think strictly inside the box.  They want everything to be perfect, so they continually second guess and doubt themselves and what they are doing. They believe that they cannot cope with being wrong. This occurs in trading decisions as well as other life decisions. Extreme perfectionists often think that once they make a bad trade, it will be the start of a downward spiral and a complete blowout of their trading account.

Hesitation very often relates to low self-esteem or other deep-rooted psychological issues. We see these more times than we would like to.  Traders with low self-esteem usually lack confidence, not only in trading, but other areas of life. Beneath it all, they doubt their ability to trade, and hesitate making a trade until they the guilt of not doing so overcomes their fear.  At that point in time, they enter a trade out of pure compulsion driven by guilt.  This exposes them to a trade with no real plan to support it.  They become victims of pure chance.  We also find that traders who hesitate may have a conflict regarding their success. They can actually fear success.  They have been told by parents or others that they were no good, that they would never amount to anything, that they were “bad.” These people strive for success at one level of their consciousness, but at a deeper level, they secretly believe they cannot attain it, or do not deserve it.

Identifying, directly facing, and eventually eliminating a problem of hesitation is the only way to truly deal with it. Chronic hesitation will eventually destroy the confidence a trader needs for success. If the problem is not dealt with and the traders continues to hesitate, miss important market moves, and see his or her equity begin to dwindle, that trader runs the risk of becoming a phantom trader, a pretender, becoming convinced that the imaginary trades being made are real. If you are prone to hesitation, it’s vital that you deal with this problem early in your trading endeavors. Identify the reasons for it, confront the problem, and make changes as soon as possible. These are changes you have to make within yourself.  If you will truly engage in self-examination with the object of eliminating hesitation, you can trade become consistent and successful in trading profitably.