Puts, calls, strike prices, premiums, derivatives, bear put spreads and bull call spreads - this technical jargon is just one of the complex aspects of options trading. But don’t let any of it scare you away.

What is option trading?

An option is a contract to buy or sell a stock, usually 100 shares of the stock per contract, at a pre-negotiated price and by a certain date.

Investors use options for different reasons. But when option trading, you’ll get the following benefits:

• Buying an option requires a smaller initial outlay than buying the stock.
• An option buys an investor time to see how things play out.
• An option will protect an investor from downside risk by locking in the price without the obligation to buy.

This is a guide for beginners that will assist you thread carefully into option trading. You’ll learn:

1. What is options trading?
2. Managing options positions.
3. Understanding options pricing.
4. Treating options trading as a business.
5. Trading options for profit.
6. Ten ultimate profit secret strategies.
7. Strategies for making the best out of bad situations.
8. The concept of "moneyness".

Frequently asked questions:

How much do I need to invest to get started?
You don’t have to invest a lot of money to get started.

What value of return should I expect when I invest?
You can achieve enormous returns if you are correct on direction and time.

I heard there is a lot of risk involved. How do I manage that?
Risk is manageable; you only can lose what you put into the trade as a buyer.

The main difference between stocks and options is time. Even though options have an expiration date, stocks do not. However, the leverage gained from options is actually enormous.