The Best Options Trading Courses
By Elizabeth Hannigan
, last updated July 8, 2011
Trading options is complicated, and you should probably not get into it without first educating yourself on the risks involved. In the most general sense, when you buy an option you are buying the right, but not the obligation, to buy or sell an asset at a particular price by a particular date. For example, say you wanted to buy a dog, but you did not have enough money to pay for the dog. You could buy an option to buy the dog for $50 within two months. When you buy an option, you only pay for the option. The payment is not a down payment on the asset. So say you paid $5 for this option. Then, two things could happen. In one month, the owner of the dog could discover that the dog is a purebred with papers. The dog could now be worth $1,000, but the owner would be obligated to sell it to you for $50. On the other hand, in six weeks the dog could catch rabies and then become worthless to you. Then you would not be obligated to buy the dog, but you would be out the $5 that you paid for the option.
This sounds simple enough, but investing in options is extremely complicated and a lot of people lose a lot of money doing it. That is why your broker needs to interview and approve you for options trading before you are even allowed to try. Just because you managed to get approved, though, does not necessarily mean that you know what you are doing. You might want to take a course before you start investing any money.
The very best way to get an introduction to options trading is to take a course at your local college, university, or community college. An accredited, not for profit school will give you all of the basics you need to start trading options. Plus, you can trust that the instructor will never pressure you into making specific investments that he has an interest in. You can find the options and investment courses in the "Finance" section of your local school's catalogue.
The internet is full of websites and online courses promising to help you become fabulously wealthy in no time at all. While some of these courses may give you a good basic introduction to trading options, you really need to be careful here. Many of these online courses are extremely expensive and will only provide you with information you could have read in a textbook from the library for free. You should definitely avoid any course that recommends that you make specific investments or sign up for a specific brokerage account.
You can also learn all about trading options the old fashioned way, with books. Check out "Options as a Strategic Investment" by Lawrence G. McMillan and "Option Volatility & Pricing" by Sheldon Natenberg. Both are required reading textbooks for most finance majors and are written in clear language that is easy to follow even for beginners.