Option Trading in Your Spare Time: A Guide to Financial Independence for Women

by Wendy Kirkland, Virginia McCullough

Overview

An easy-to-understand beginner's money book to options trading to earn passive income and grow your personal wealth.

This book, geared specifically toward women, describes how to be a successful option trader, even if you hold down a full-time job or are a full-time stay-at-home mom.

While option trading is definitely not a risk-free method of investment, for women who have a few hundred extra dollars that they want to use to break into investing, option trading can be a lucrative way to make money.

This book explains what everything means and how to be an option trader in easy-to-understand, step-by-step ways that makes it great for the beginner or the more advanced investor. It is primarily focused on trading online and tells you what you need to know to better your chances of being successful.

You'll learn:

• The basics of the stock market and how to trade based on your level of risk
• How to identify the best time to buy and sell
• What to watch for once you're in a trade
• Setting up a virtual trading account

Also see Exploring Your Options: Charting Your Own Path to Prosperity by Wendy Kirkland for an up-to-date guide for beginning option traders and traders who want to expand their understanding of the options market.

Product Details

ISBN-13:	9781572487086
Publisher:	Sourcebooks
Publication date:	07/01/2009
Pages:	240
Sales rank:	502,248
Product dimensions:	6.00(w) x 8.90(h) x 0.80(d)

About the Author

Wendy Kirkland (Asheville, North Carolina) is a successful option trader when she's not running her gift shop in Asheville, North Carolina. She has hosted a number of investing groups for women to help them learn the ropes of option trading and share their stories.

Virginia McCullough (Green Bay) is a full-time writer with over 25 years of experience. She currently lives in Green Bay, Wisconsin.

Table of Contents

Acknowledgments ix

Preface xi

Chapter 1 The Basics 1

Your Mindset

Starting the Journey

These Things Called Stocks

Shopping with the Bulls and Bears

Adding Options to the Mix

The Trend Is Your Friend

What Can You Expect from Trading Options?

We Have Choices

More Terms to Remember

Chapter 2 The Stock Market and Risk-Looking at Trading Personalities 16

What We Watch For

Reason and Emotion

Let's Talk about Greed

Know Thyself

Understanding Risk

Gaining Confidence

Chapter 3 We Begin-Creating Your Plan 24

Exchange Traded Funds (ETFs)

Indexes

Why Purchase Options on Indexes of ETFs?

Why Purchase Stock Options?

A Critical Tool for a Successful Trading Plan

What Do You See?

What Made the First Cut?

Chapter 4 Chart Reading 101 34

Back to Your List and IBD

Checking for Ripeness with Technical Screens

Trend Trading-Examining Trends

Simple Moving Averages (SMAs)

Understanding Option Chains

Long and Short Moving Average Crossovers

Chapter 5 Indicators and Oscillators 56

Relative Strength Index (RSI)

Understanding Volume

Understanding Gaps

Understanding Oscillators

Williams %R

Moving Average Convergence and Divergence (MACD)

Percentage Price Oscillator (PPO)

Understanding Stochastics

Average Directional Index (ADX)

Accumulation/Distribution Line

Chapter 6 The Matter of Puts 83

Applying the Principle behind Puts

The Big and Small Pictures Count

Chapter 7 Putting It All Together-Identifying Buy Signals 88

What to Keep Your Eye On

A Strategy in Action

Buy Signals-Calls

Buy Signals-Puts

Keep Your Eye on the Charts

Another Chart to Analyze

Let's Look for More Opportunities

Looking at a Well-KnownCompany

A NASDAQ Stock

Looking at Another Sector

Looking at ETFs and the Option Index

Chapter 8 Recognizing Sell Signals 125

The 30-Day Rule

The 7-Day Rule

The 7% Rule

Sell Signals-Calls

Sell Signals-Puts

The Technical Analysis

Clear versus Cloudy Thinking

Chapter 9 Setting Up a Trading Account 133

Following the Steps

Other Issues

Virtual Trading

Using Other Tools

Other Features at OptionsXpress

Chapter 10 Volatility 143

Using Volatility

Overall Market Volatility Chart

Introducing the Greeks

Theoretical Value

What to Take Away for Now

Chapter 11 Strategies 151

Examining the Trading Strategies

What to Watch for Once You Are in a Trade

Other Useful Information

When to Start, When to Wait

Chapter 12 Working the Plan 167

Other Tools

Option Chain Chart

The Cost of Trading

Chapter 13 The Pattern Funnel Narrows 179

The Patterns-Triangles, Wedges, Flags, and Pennants

Continuation or Neutral Patterns

Candlestick Patterns-Bullish, Bearish, Reversal, and Neutral

Chapter 14 Q&A with Wendy 193

Is there a daily or weekly routine or schedule that you follow?

Have your goals changed since you started option trading?

What is your frame of mind-your mental approach-when you make an investment?

How are taxes on profits and losses handled?

Can you form a business around option trading?

Is option trading completely an isolated, individual endeavor?

What qualities do you think good traders share?

Are you involved in the market all the time?

Do some women trade only ETFs?

Do you have a favorite stock or a list of stocks you particularly like?

How do you handle losses on an emotional level?

How much of your investment fund do you have invested at any one time? And how much on any one stock?

Do you watch the stock channels on TV? And if so, how do you filter the information?

If an option contract drops to the point that it has no value at its expiration date, do you have to close it, so that you don't have to exercise the option to buy the stock?

Are there option traders who day trade?

When you sell an option contract, are those funds available immediately to reinvest?

What would you say is the most valuable lesson you have learned?

What would you say has been your biggest mistake?

Can a person make a living trading options?

Glossary 203

Appendix: Useful Websites 213

Index 215

About the Authors 221