Happy Monday, traders…
Ben here.
It’s no secret that most people start trading stocks before they take a shot at the options market.
Not surprising. The options market is complex with more factors to consider than the stock market…
Consider the paradox of choice that options traders face — the overwhelming number of contracts, strikes, and expiration dates to choose from…
While it’s true the options market is difficult to master, it’s certainly not impossible.
And better yet, the potential rewards are extraordinary.
But here’s what many beginner traders don’t realize…
How you start your options-trading journey can make or break you.
One early mistake could hurt your confidence … while making great opening trades can set you up for many more, both mentally and strategically.
With that in mind, let me show you how to start trading options the right way…
👨🏫 Tip #1: Open Separate Accounts 💻
If you’re trading stocks or have long-term investments, it’s smart to set up a different account just for trading options.
The main reason is to simplify your performance evaluation.
If you put your money in different accounts for different types of trading, it’ll be easy to see how much you’re profiting (or losing) in each arena.
Depending on how you trade: I recommend having one account for long-term holds, one for the short-term trading of common shares, and a third just for options trading.
This will help you keep your P&Ls clear to avoid mix-ups.
Also, when it’s time to do your taxes, your bookkeeping will be much simpler.
Bottom Line: When your accounts are separate, it’s easier to tell what parts of your trading are doing well (and what parts need work).
📊 Tip #2: Don’t Overfund Your Options Account 💸
One of the great things about trading options — and why I think it’s ideal for traders with small accounts — is that you don’t need a lot of money to start.
This is because you can make more money — faster — with options than with regular stock trading.
Options prices swing wildly — sometimes by 100%, 200%, or even 500% in a single trading day.
There’s no reason to put a lot of money into options trading before you’ve proven your ability to yourself.
If you put too much capital in at the start, you risk losing more than you’re comfortable with.
I recommend not putting more than a couple thousand dollars into your options trading account at first.
Trust me … If you do well and your money grows significantly, you won’t kick yourself for not starting with more.
But if you put too much money in and lose it all, you might get discouraged from the options market entirely.
Bottom Line: It’s better to start small and grow your account gradually by proving your strategy works.
📈 Tip #3: Your First Trades Can Make (or Break) You 📉
If you’re extremely discerning with your initial plays — and find some strong winners early on — your account could multiply several times in a very short period.
Again, this has to do with the massive upside that’s possible with options contracts…
But the opposite is true as well…
If you get trigger-happy and make subpar trades in the beginning, your capital will disappear faster than a speeding bullet.
With a new small account, you have limited rounds in the chamber, so to speak…
This means you must be extra cutthroat about the trades you make (and don’t) when you’re trying to build it up.
On the one hand … Nail your first few plays and you’ll have cleared one of the biggest hurdles in the game.
On the other hand … Fail to profit on your initial trades and you’ll be re-funding your account in no time.
If you want to grow a small amount of money, options trading can do it quickly (depending on how you go about it)…
But you need to be careful. Options trading can bring big wins, but also quick losses.
Keep your accounts separate, don’t start with too much money, and be extra discerning about your first few trades.
By following these rules, you’ll be setting yourself up for long-term, options-trading success.
Now, before we go, let’s look at…
💰The Biggest Smart-Money Bets of the Day💰
- $4.2 million bullish bet on PLTR 01/31/2025 $79 calls @ $3.75 avg. (seen on 1/24)
- $2.3 million bullish bet on ARKG 02/21/2025 $25 calls @ $3.05 avg. (seen on 1/24)
- $1.7 million bullish bet on CMCSA 02/21/2025 $39 calls @ $0.56 avg. (seen on 1/24)
Happy trading,
Ben Sturgill
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*Past performance does not indicate future results
