Trading stock options online

[MisterNiceGuy]

Alright, I have been doing some reading on options and was wondering what the best method is on trading stock options online. I have an ameritrade account and I see that I am able to trade options on there. I also have bank accounts with chase/jp morgan and have thought about switching over to them, but I was thinking there might be some brokers who specialize in option trading.

Is it best to just trade with these brokers or are there more specialized brokers to use for options that are cheaper, easier to use, and quicker?

Also, I have been told that the best software for trading commodity options and futures is TT(Trading Technology Int.). Anyone use this and how do they like it?

Thanks

[UrmaBlume]

1. Trade Station is the best trading & execution software for stocks, options or futures. It also comes with Option Station as a free add-on - www.tradestation.com

2. Almost 90% of all options expire worthless.

3. If you are asking questions at the level indicated by your post you are very, very far from almost any possibility of profitable options trading at any level.

"McMillan on Options" & "Options as a Strategic Investment" also by McMillan are 2 great books to start with. After you have digested EVERYTHING in those 2 books you will almost be up to novice level.

I don't write this to discourage but to make you aware that if option trading was as easy or required as little knowledge/expertise as you seem to think, it would be impossible to get a cab and there would be no dishwashers.

cheers & good luck

[MisterNiceGuy]

???

I never said I was ready to trade....I am just researching option trading and wanted to know the best platform to trade so I can further my research and learning. I thought this forum wouldn't be as arrogant as the high stakes NL...obv twoplustwo obv.

[UrmaBlume]

Well at least now you know the best platform and two of the best option books and that 1)answers your questions and 2)makes you more learned than you were

[APXG]

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???

I never said I was ready to trade....I am just researching option trading and wanted to know the best platform to trade so I can further my research and learning. I thought this forum wouldn't be as arrogant as the high stakes NL...obv twoplustwo obv.

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ok after this response my advice would be to just forget about trading altogether...or go work for an ibank [img]/images/graemlins/wink.gif[/img]

[mrbaseball]

[ QUOTE ]
Also, I have been told that the best software for trading commodity options and futures is TT(Trading Technology Int.). Anyone use this and how do they like it?


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I use TT for commodities trading. It's a tad pricey ($1500 a month) for the full package but it the best commercially available autospreading software. There are less expensive packages if you don't want autospreading or autotrading. Since I am primarily a spreader I need it. For my stock and stock options trading I use the Goldman Sachs Redi-One system. These are basically professional tools though so unless you are doing this as a sole means of support there are cheaper ways. You can trade stock options with just about any online broker. The least expensive juicewise would probably be Interactive brokers.

[pig4bill]

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2. Almost 90% of all options expire worthless.


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A common myth that I've never seen documented.

OP, a lot depends on what you want to do with options. If you just want to buy some calls or puts, almost any stock broker can also let you trade options. If you want to do spreads, some low-end brokers like Etrade has the basics. For a somewhat more powerful platform, but still not pro quality (or cost) there are a few brokers like Optionsxpress.

[mrbaseball]

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2. Almost 90% of all options expire worthless.



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A common myth that I've never seen documented.


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90% is a wild exageration. But the nature of options does dictate that more will expire worthless than not. This is because the further out options are cheaper so it's easier to buy more of them. They are used for insurance, income producing writes and as lottery tickets. I just took a glance at SPY front month (sept) open interest. 35% of the calls are currently in the money (ie not worthless if we were to expire here) and 20% of the puts were in the money. There are tons of out of the money puts that people have on just in case the bottom falls out. Who can blame them? I have a few myself [img]/images/graemlins/smile.gif[/img]

But exagerating that all options go out worthless is foolish. It's also foolish to think that even though a lot of the open interest is in far out of the money stuff that it makes it losing idea to trade that stuff. There are lots of ways to trade options and whether they get into or out of the money isn't really important unless it is a pure speculation and lottery ticket type of trade. Out of the money strikes are the nature of the game because that is where a lot of the leveraging strategies come into play.

[yellowbluebus]

OP,

Check out www.thinkorswim.com; they specialize in option trading. I love their options software, then again I haven't tried anything else. [img]/images/graemlins/smile.gif[/img]