Keep in my my most important lessons even though you might not understand them yet.  Read all the pages keeping these lessons in mind.

Most important lessons I have learned

• Trading options or even stock market investment in general is a form of gambling.  The house ( in this case the options market ) is rigged against you through the option premium prices.  The market makers have already manipulated your odds of winning against the house by increasing or decreasing the price of the stock option.  You can win this game, but you will have to thoroughly understand the rules of the market and how to play your hand in different situations.  In blackjack terms, you will need to know when to ask for hit, pass, or fold if you have a two kings.
• Understand that the extrinsic value of an underlying stock, which is determined by time and volatility, must work out of a stock before you actually make any form of profit.  Therefore, if you have chosen the right direction and the underlying stock price has moved in your favor, you option will still be negative until all of the extrinsic value of the stock has worked out of the contract value.  Read more

   

• Know that you do not have to take a contract all the way to expiration. In fact, you should close out most contracts between after making about a 30 to 50% profit.  Read more

   

• Don’t even think about starting options without understanding management strategies for if your contract appears to be going against you.  This strategy might be as simple, albeit gut-wrenching, to close the contract early for a loss.  Remember that all contracts can be adjusted ( managed ) to save you from a maximum loss in your account.  Read more
  
  
• Credit spreads are the easiest option strategies to manage.  Debit and naked options are the most difficult to manage.  Narrow spreads are safer ( although less lucrative ) than wide spreads.  Read more
  
  
• Understanding how to read charts, in particular, understanding how to identify support and resistance levels, has been the most important step in creating a safe and successful trade. Read More

Intro Paragraph

Building Blocks are combinations of buying and selling of calls and puts

• Calls and Puts
• Buy or Sell
• Credit and Debit Spreads
• Strangles and Straddles
• Condors and Butterflies
• Flies and Lizards

• Volatility – Vega
• Time Decay – Theta
• Extrinsic and Intrinsic Value
• Expiration Calendar
• Earnings Calendar
• Dividends Calendar

Earnings Season

20 days before earnings

The day before earnings

The day after earnings

Increasing volatility 

Decreasing volatility

In order to make a successful trade, you need to identify the direction and strength that you think a stock will move.  At the same time, you identify your safety nets ( resistance and support ).

What are you trying to learn from the indicators

• Moving Averages
• Momentum
• Direction
• Support and Resistance

• MACD
• Bollinger Bands
• Keltner Channels
• RSI’s
• Fibonacci Retracements
• TT Squeeze