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Getting Started With Options Trader

Welcome to ChangeWave Options Trader! Whether you're trading options for the very first time or you're looking to for a new way to expand your options trading profits, we've got you covered!

Options trading sometimes gets a bad rap as being risky, complicated or difficult to make money at. Well, we are here to dispel those myths because we are making a living as professional traders and, even if your goal is to make more money to take dream vacations or to pad your retirement accounts, the types of profits you can make as an options trader aren't just reserved for the "pros."

Below is a guide to what you can expect from Options Trader to help you to make the most out of your options-trading journey. We look forward to helping you along the way!

TRADING STRATEGIES

Although there are dozens of options trading strategies out there that can help you to hedge your portfolio or to make both long- and short-term speculative bets, we aim to use simple strategies that help you to take advantage of directional moves (i.e., up or down) in the underlying stocks.

The bulk of our trading recommendations will be buying single options, both calls and puts. That is, if you can "Buy to Open" a call or put, you're all set. Similarly, we will close the trades simply as well, by "Selling to Close" them.

We will also recommend the occasional spread trade -- that is, buying one option to hold long while simultaneously selling another option short against it in a 1-to-1 ratio. This type of strategy serves to both reduce your entry price for the trade and thus reduce your risk.

With both strategies, the most you can lose is the amount you put into it. Accordingly, the less you spend to enter a trade, the more potential upside you can take advantage of!

We may also recommend other strategies from time to time. We will provide specific buying instructions and exit strategies so that you can feel comfortable participating in every trade.

WHICH TYPE OF TRADING ACCOUNT IS RIGHT FOR YOU?

This type of options trading can be done in a variety of trading accounts, including in your Individual Retirement Account. However, you may also wish to consider adding a trading account dedicated to your options trading. Many online brokerages are dedicated to options trading and are better-prepared to answer your questions than a broker whose primary focus is not on options.

There are many brokerages out there to choose from. You may wish to check out our partners, but please note that we do not specifically endorse any brokerages, as only you can determine which one is right for you.

If you've never traded options before, or you've not yet hit your groove toward options-trading success, you might be out there watching the trades but not participating.

VIRTUAL TRADING ACCOUNTS

To help you gain some skills and confidence, I invite you to sign up to use a Virtual Trading Tool at no cost. You can get the feel for entering orders and watching your "positions" without risking a dime of your own money. And when you're comfortable with how easy it is to trade options, you can get started making real profits anytime you're ready!

TRADING LANDSCAPES, ALERTS

Each Monday, you will receive our Weekly Trading Landscape in your inbox. We also aim to send you one to three trading opportunities each week. These will arrive in your inbox independent of the Trading Landscape and clearly designated in the subject line as a "ChangeWave Options Trader Alert" so that you know it's time to take action.

In addition to new trading opportunities, you will be alerted when it's time to take action on an existing position, whether to cash in on your profits or to cut your losses to free up capital for the next trades that are coming down the pipeline.

Because we are watching the markets throughout the trading day (9:30 a.m. to 4 p.m. Eastern), we will send you alerts during market hours so that you can take immediate action. There is one caveat to this goal, however, and that is that these big-money players have a penchant for positioning themselves in their trades toward the end of the trading day -- likely when they suspect no one else is watching. But we are always watching! So, if a trade comes at you later in the day, that's the reason why!

We always post your Trading Landscapes and Trade Alerts on the Web site immediately, so if you accidentally delete a message or the e-mail gremlins attack your Internet Service Provider, you can refer to our archives 24/7. In fact, please be sure to add Options@ChangeWave.com to your "safe senders" list to be sure that you never miss an e-mail from us!

ENTERING, EXITING POSITIONS

Because we will always include a "Buy Under" price with each new recommendation, you may want to place a limit order with your broker to get that price. For example, if we recommend buying the XYZ Jan 60 Calls up to $1.15, that means you should try to get into the position for $1.15 or cheaper.

To do this, you can tell your broker to pay no more than $1.15 per share (or $1.15 per contract, as each option contract represents 100 shares of the underlying stock.

We expect for our prices to hold for a few days, so that if you don't get in today, you can try again tomorrow or the next day. Limit orders can be good for the day or good-till-canceled (GTC).

If you use a day order, you can try to get the same price the next day or even bump it up by a nickel or a dime to ensure that you get into the trade, but don't "chase" the price if the trade is moving up too quickly.

Remember, you want to make the biggest-possible gains and the less you pay, the lower your risk. Also remember that new trading opportunities are coming down the pipeline every few days, so if you don't get in, there's always another one coming around the bend!

Although modern technology has allowed us the ability to place trades at any hour of the day, your best bet is to place your trade orders during market hours. In the aftermarket, it's challenging to tell what the "real" price of the option should be. Plus, market-makers set their prices for both stocks and options in the pre-market based on the previous day's activity and outstanding orders, so you have a better chance of getting your price during the trading day.

MANAGING TRADES

If you've been trading options on your own for a while, you know how challenging and even nerve-wracking it can sometimes be. Sometimes the best trades can go awry because of market gyrations or the stock turning around and running in the wrong direction.

Although we give you very specific Buy Under prices at the time we recommend trades, we do not include sell stops for two reasons.

One, many traders prefer to implement their own stop-loss levels, anywhere from 20% to 50% down, so you may want to set your own stop-losses in accordance with your own overall trading strategy and risk tolerance.

Secondly, we are following these trades right along with you. You can reference our Open Positions listing at any time to see how the trades are performing, but you can also be sure that we are continuing to monitor the big-money buyers in both existing and potential trades. Thus, when we determine that it's time to take action on an Open Position, we will alert you by e-mail.

Also, in our Weekly Trading Landscapes, we review our open trades in case something has changed, or to check in with you to let you know that we still like those trades. Again, we will send you actionable information in alerts, but if we determine that it's time to raise a Buy Under price or to take advantage of dips for new folks to get into a trade or for other members to add to a position, this is a place to look for news on our trades.

What if a position becomes profitable and you're ready to cash out on some of your contracts? Again, we'll send a profit alert when the time is right to close some or all of a profitable position. But if you are feeling anxious and want to preserve some profits, you may feel better if you cash out of a few of your contracts to preserve those gains. Only you can determine what is best for your individual portfolio.

Remember, we're here to help you along the journey to becoming a confident and successful options trader. If you have a question about a specific Open Position or about any of the strategies we are using in Options Trader, please feel free to contact us at Options@ChangeWave.com.

Now, let's get ready to make some money!