“You miss 100% of the shots you don’t take” – Wayne Gretzky
Before we get started, I wanted to offer a word of caution. Options are leveraged financial instruments and may not be for everyone. If you do the wrong things, you can actually lose all of your investment (plus some). It is estimated that 80% to 90% of retail options traders lose money. Approximately 16% of retail options traders take their account to zero. If you have an addictive personality or a gambling problem, options may not be right for you. You need to have a moderate to high degree of financial sophistication and some investing experience in stocks before considering options trading. But if you are ready to level up, if you are ready to control your risk and have a potential for greater returns, then this may be for you. This site is focused on options trading for beginners, and to give more experienced traders a proven options strategy that is simple, consistent and time efficient. If that sounds like you, then keep reading.
The first step in your journey is to open a Brokerage Account. I have used many accounts over the years including Think or Swim (T.D. Ameritrade), TastyTrade, Fidelity and Robinhood. Some of you may be wondering what a Brokerage Account is? Well, Brokerage Accounts are a type of investment account allowing you to trade a wide range of investments, including stocks, bonds, mutual funds, options and exchange-traded funds (ETFs). It is a taxable account funded with after tax dollars. A primary difference between a brokerage account and other investment accounts, such as retirement accounts, is how each is taxed and if contributions are limited. Most retirement accounts do not allow you to trade options, except for IRAs. Traditional IRAs do allow you to trade Put Credit Spreads.
How to do this? Well, you can open a brokerage account at a brick-and-mortar or online brokerage by completing an application. I recommend using an online brokerage because it is faster and more accessible on your laptop, tablet, phone, etc. I recommend using TastyTrade or Robinhood, but Fidelity is a good option as well. If you want the ease of having everything in one place, and you already have a Fidelity account, even in an IRA, then this system will work for you as well. Fidelity has good customer service and it’s a very strong company. You can trade on Fidelity.com on your laptop or use the Fidelity mobile App (recommended). TastyTrade is the king and has the best options trading technology in the industry. Robinhood has an outstanding App with a great phone interface and offers user friendly options account features that are easy to navigate. Robinhood is low cost with $0 in commissions and only the mandatory fees. For our Put Path Options Trading System, it will be a DIY approach so we use the online apps to trade.
A brokerage account application will usually ask for personal details, employment info, investment profile, and, if you’ll be investing online, bank information. The process should take only a few minutes online. Next, you’ll need to fund your account. Once you open a brokerage account, you can link it to a bank account and transfer money in order to fund it. Once you’ve been approved to trade options and have funded your account, you are ready to trade. The money that is not invested yet will sit in an account called cash reserves, core, or sweep account. This is also known as the Buying Power. We trade $5 wide credit spreads, so you will need Buying Power of at minimum $500 to make one of our options trades. You will need at least $2,000 to meet account margin requirements and get the full benefits of trading one underlying (QQQ) and around $24,000 minimum to follow the system fully and trade 12 names a week. Hit next to progress to the next step!
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