Options

Hi everyone,

I realise this question is not about property investment but I couldn't think of anywhere else to put it.

I was wondering if anyone on this forum knows where to find information on learning to trade options/stocks. I am interested in leaning more about this in order to perhaps make a few dollars on the side in order to increase my property portfolio. I know there are places where you can learn how to do this but I don't know where to find them. Would ASIC have such information?

If anyone can point me in the right direction so I can undertake further research I would be most appreciative.

Thanks

Nat.
 
The ASX has a list of booklets that can be downloaded from their site. http://www.asx.com.au/markets/l4/OptionBooklets_AM4.shtm they also run short courses.

You may even find it worthwhile visiting the Traders and Investors Expo, the Melbourne one is the beginning of May........The Brisbane one is in July.

http://www.asx.com.au/education/ExposEvents_IE2.shtm

There are also plenty of good books around. Louise Bedford has one called 'The Secrets of Writing Options - An Australian Guide to Trading Options for Profit'. It's a good basic book to get you started.

A lot of the US share sites also have info on options, do a search on google. One by George Fontanills from Optionetics fame is on the OptionsXpress site, might be worth reading.

http://www.optionsxpress.com/welcome_media_whytrade.htm

Hope that's got you started :)

Ruby
 
Thanks so much Ruby, I will definately check out all of those. Doing a short course at the ASX sounds like the way to go.

Nat.
 
On a similar theme.....does anybody know an Options broker in Melbourne that charges a flat fee rather than a % based fee (I find that the broker's commission eats too much into your profits when trying to write covered calls).

Thks,

GlennM.
 
TD Waterhouse - $44 per trade. This is a discount broker so no advice (which is the way I like it). For a covered call I believe it will be 2 transactions (1 for Stock buy and 1 for the write) so $88. Also I believe they will soon have an online trading facility which will be under $25 per trade).

http://www.tdwaterhouse.com.au/

Sanfords already have online trading I believe.

http://www.sanford.com.au/

These are the two best known. There is also Commsec, Etrade, etc
 
Nat
Trading options for profit is not quite as easy as the broker would have you believe. Have you traded shares for a long period of time? If so then you would have come across technical analysis and what is supposed to happen given a set of chart patterns. If not then spend $500 on a range of trading books, then do some paper trading allowing for HUGE slippage in the bid/ask spread that all but the few thickly traded options have. Then put a small portion of your capital in an option trading account, divide it into 10 lots, and when you lose it all on the next sure thing/chart pattern/whisper, after spending weeks or months glued to the screen, go and buy another property.:p

Glenn, Instead of writing covered calls, sell a put instead. The risk factor/profit level is the same and half the brokerage.

bye
 
I've always found Sanford very good, brokerage doesn't seem too expensive, but I don't trade in 100s of 1000s of dollars either!
I don't know that there IS a discount brokerage rate for options trading, like there is with normal shares.
 
Another option to options :) is warrants. Similar in nature, they may give you a good leverage, can be traded on the main market, I use E*Trade with $33 brockerage for bothe shares and warrants. I find warrant trading exciting. My first (unsuccessful) attempt to trade warrants was 3 years ago. Now I am back to it, older and wiser, making $2200 in the last month started with $4000. I am averaging just $300 per position, but that's ok, I'm not too greedy. ASX web site has a lot of info on warrant trading. My method is to select 4 warrants (2 calls, 2 puts) with expiry within 2-5 months, and use them for 2 weeks. Then - reevaluate the selection.

Cheers,

Lotana
 
Originally posted by GlennM
On a similar theme.....does anybody know an Options broker in Melbourne that charges a flat fee rather than a % based fee (I find that the broker's commission eats too much into your profits when trying to write covered calls).

Thks,

GlennM.

It might be a good question to ask on stockcental.......they have a stock brokers forum, full of that sort of info.

http://www.stockcentral.com.au/cgi-bin/forum/scf.cgi

Good luck with your search!

Ruby :)
 
Hi,

When I got the idea to learn about options I did a course run by David Novak (do a web search), when I did the course (a few years ago) it was a 2 day course. You did 1 day where they taught some basic indicators and tracking techniques, then you paper traded 3 stocks for 2 weeks and then came back for another day where they reviewed your work and taught you some more indicators and how some trading software works (Metastock at the time).

I liked the course because it was in a workshop style with applying knowledge, but it was one of the those $1000+ courses where you could probably get the same info on the net or in books, but I needed the leading by the hand approach.

Was it worth it?, I never did trade with real dollars, found I didnt have the mindset to manage that level of risk. Which in some way was better than learning the hard way I guess :p

The terminology and the indicators were nothing new, just the environment in which its was taught.

From my exposure of learning options, I think you need the following;

1) A good internet forum where people just talk options that has been around long enough to experience 2-3 major market swings. That has a couple of newbie boards. When I did the course Novak had a mailing list where they posted questions and got answers from either Novak or other students.

2) Buy a couple of books or read a couple of websites that explain the basics like trend lines, indicators and charting. I bought several from Dymocks (Chris Tate, and others)

3) Find a way to papertrade either via excel or some free trading program (I dont know if they exist). Excel has a candle stick chart option and can be used to create a simple chart for drawing trendlines.

4) Develop a money management system, how much of your bank will you trade, when to get out when you win, when you lose. How much much per trade. And stick to it.

5) And this is the trickest bit, select a SMALL number of indicators (2-3) that you can use to indicate a BUY or SELL. At one stage I keep adding and adding indicators as I learn more and more, and in the end got analysis paralysis :p

6) And papertrading is VERY, VERY different to trading for real. Greed and fear come into play.

There was a great line from a book I read called "The New Market Wizards", I can't remember it verbatim, but there was this Trader that was interviewed or mentioned, and when he became the best trader around he said he no longer enjoyed it, because he was able to completely control his emotions while he traded, the excitement and rush he had when he traded before was now gone. Just an interesting thing to hear about what some did to succeed.

Regards
Michael G
 
Wow, thanks for your contributions everyone. After downloading and reading the booklets from the ASX site I realise that it is a lot harder than it first sounds. I think I'll start by trading on the normal share market. My aim is to make some pocket money to replace my weekend part time job and hopefully increase my knowledge of the market so one day might be able to quit my full time job and fund my property portfolio. I can see there will be a lot of reading ahead for me!

Nat.:)
 
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