I don't recommend trading the XLF, there are problems with volatility, volume, and getting out of your trade when you need to, at least that is my experience.
Trading options is a bit harder to start than trading stocks, but in order to start, it is always best to try doing some of the free webinars on Trade King and OptionsXpress. Both sites have excellent material, and the playbooks are a must. OptionsXpress has an online guide that is called "Options Strategies", it is really hard to find on the site for some reason, try this link:
https://www.optionsxpress.com/educate/strategies/calendarspread.aspxTradeKing has the Option "Playbook", I bought the hard copy.
Best to go ahead and get a free OptionsXpress account, they have good tools, so does TradeKing. OptionsXpress has papertrading, so you can practice your trades without losing your butt.
Prior to May 30th, go ahead and get a Think or Swim account funded, after that, TD Ameritrade takes over and the existing account holders will be "grandfathered" in and keep the existing commission structure.
Think or Swim has a trading platform that you use for free, and it is not as simple and intuitive to use as the web based trading at OptionsXpress or TradeKing, but it makes it much easier and faster to do what you need to do for complex options strategies.
Start with basic Puts and Calls first, then go to Spreads, and up the chain.
On TradersLibrary.com you can buy for like $150 a Larry McMillan starter set of training manual. It covers all of the basics and is a good reference.
If you want, you can run your suggested trades by me to help you.
For instance, if you think FAS is going to go from $9 to $12 in two weeks, you would want to try trading a Bull Call Spread on the next month's contract expirations.
For example, if it is May for this scenario.
Buy the FAS June $10 strike for $1.50 per contract (representing 100 shares of stock), and sell the FAS June $12.50 Strike for a credit of $0.50 per contract.
Your total risk is $1.00. Your max profit is when the price of the FAS underlying reaches $12.50, and you can't make anything above that due to the contracts you sold at $12.50, but you will have safely made your return.
Now this is a very simplistic example, there are many more factors behind the scenes such as volatility and other Greeks, but the hardest part about option training is:
1. Experience
2. Knowing which month to trade in
3. Knowing what strike price
4. Knowing what options strategy to trade for the maximum profit with the lowest risk.
You can email me for more info and tips, here is my email:
DeltaPapaOscarMike at yahoo.com (military coded for spam robots, first capitalized letter)
