The Complete Beginner’s Guide to Options Trading Learning Curve
It would be amazing to start with “Growth Hacking” itself rather than Learning curve for Options Trading.
You would be in the cold if you lack these options trading basic skill. The two main reason behind this is one that options give you an opportunity to generate passive income and secondly they act as insurance for your investments.
A continuous bearish market for a longer period of time will teach you the importance of passive income from options trading. A market crash or bubble would make you realise the importance of insurance in the investments or the stock market.
Now since this is said let’s jump to what is required to get hold of options trading and drastically improve your learning curve.
What’s the most sensible thing you’ve ever heard someone say?
Often overlooked but the most important. Let’s Begin.
Don’t reinvent the Wheel
Hacking Learning curve for options trading would be possible if you do not try to implement your trading ideas or strategies. Understand few basics which options trading strategies rely upon. Like Call & Put Options, Implied Volatility, Beta, Standard Deviation & Options Trading Strategies.
While learning the options trading strategies you would get interesting ideas and strategies avoid them initially.
Also, understand what is the purpose of your options learning curve. There can be only two reasons one is Passive Income and secondly hedging or insurance against your investments.
Both of these can be achieved in the above-said duration.
Don’t Do Multitasking
This is the bare minimum and basic requirement for learning options trading. Learning fundamental analysis, technical analysis and along side options trading strategies with advanced options Greek management. Mark my word you are not going to have the required clarity.
Once you are done with your basics concentrate on either passive income or hedging your investments alone. Out of the few income generating strategies, you would need to understand and learn one options trading strategy. This completely depends on your learning environment from right people to right resources.
You don’t have to master all the options trading strategies to be very successful in trading options.
For Hedging, you got to Learn.
- Cheap Insurance or Buying Put Options
- Spread Hedging
- Calendar Spreads
For Passive Income, you got to Learn.
- Covered Calls
- Naked Put Writing
- Double Call Ratio
- Credit Spreads
Understanding the above few options trading strategies for the above-mentioned purpose would be idle to jump-start your learning curve. But before that first finish with either hedging or passive income and then move on to next.
Forget Your Trading Skills
Stock Trading is altogether a different ball game.
People who are coming for stock trading background should, in particular, be very careful. Their stock trading skills would be a hindrance to learn options trading. While learning options trading one has to forget the stock trading be in intraday or short-term trading.
Your stock trading skills would challenge your options trading learning curve. Unlearn or ignore stock trading basics and skill for understanding and learning options trading strategies faster.
Get out Analytical Person in You
There are several tools available to backtest the options strategy.
Basic Analytics understanding will help you to get a better understanding of how each options strategy is working. Another way to jump-start your learning curve is to start paper trading.
There are various tools available in the market which will give you the right exposure in learning the options trading fast. Certain Options Mentoring courses also give emphasis on the various strategies that give you proven and tested option trading strategies.
Breakup The Technique
The entire technique can be broken into smaller parts for better understanding.
Understanding the whole strategy in one go is a hell of a task. One cannot start to learn from Condors immediately. One has to first learn to sell naked options, then options spread and finally multiple options spreads.
Starting from the basics and gradually going to the most complex strategy would give you the right required exposure. At the last one can start learning options Greek management which can be used for passive income generating strategies only.
Jump in Learning Curve can be achieved when each and every strategy entry, exits and adjustments are well understood. Every strategy is advised to enter only during certain parameters and predictions. With wrong predictions you can still make money is another topic altogether.
Implementing the Options strategy when its’ time comes is the most important aspect of the learning curve acceleration. Once you have been through with a single strategy your task is memorised or note down the right entry & exit parameters.
Keeping these parameters in mind while learning other strategies so that one strategy is not been confused with other strategies.
One Options Trading Strategy at a Time
Unless and until you are not clear with the strategy you have started to learn, keep hustling. No matter how much time you take to learn your first basic concept or options trading strategy do not jump to the next strategy since you would mix up strategies and their entry and exit scenarios.
Learning the very basics may take up even 30% of your time. Keep Hustling. But do not jump.
Post understanding every concept start paper trading and backtesting. This will dramatically increase the learning curve. Once you are fully convinced about all the aspects of the options trading basics and strategies only then move off to the next step and one step at a time.
Now that since you have reached here. I would also like to emphasise that how much you learn is more important than in what time you learn.
Deeper understanding would play a bigger and better role in options trading.
Also, check out our Options Mentoring Course for more blog tips and follow our blog for a comprehensive guide to improving your blog and deriving an income from it.
Did you find some great ideas to increase your learning curve on your own in the post? What are the exciting ideas informing your own option trading strategies—and how are you implementing them?
Let us know in the comments.
If you enjoyed this post, I’d be very grateful if you’d help it spread by emailing it to a friend or sharing it on Twitter or Facebook. Thank you!