Options are extremely leveraged, and require very little upfront capital; but, there is a lot to learn. With Guy's book for beginners, I was able to get a full grasp of what options really do. Literally the right to buy and sell stock, which you can also buy and sell, and any combination thereof. Example: you can buy the right to buy a stock, sell the right to buy a stock, or sell the right to sell a stock. Once I got my mind around that, I was excited to finally figure out what the hell was going on.
All of those calls and puts, dates, and small change numbers made sense. No longer was it just $0.55 for December, but an opportunity to buy the stock at XX price for $0.55 x (Number of Contracts) X (100). $0.55 went from pocket change to $55.00. I guess the light bulb was on. (Reader note: this is a dimmer switch bulb).
Guy's book was easy to read, and he laid out basic strategies. I perused the book, and decided that a Vertical Spread, or a Bull Spread strategy was the one for me. The next day, I applied for options permission with E*Trade, for level 3. A day later they came back to me, with authorization for level 1.
I shook my head. Apparently I didn't have enough experience as a trader to qualify for anything higher. My next big question was, what was a level 1 mages abilities? Covered Calls, Buy-Writes, and Roll ups/downs.
To be honest, after having just read the book with about 40 different options strategies laid out, I couldn't tell you what any of those three things were. I made up my mind, and decided, rather than give up on options, I would learn what the hell these things were, and how to profit with them.
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