Options trading. The end of the road. The last line of defense. An individual trader\u2019s last attempt at glory. The opportunity to turn $1K into $100K overnight. We get it. After you have tried forex. After you have tried futures. After you have tried ETFs and simply find them too boring. After your account has dwindled down to a minimum level and when the percentage return you need to see just to get back to break even seems too large, options are where you land. But should you be trading options? This is a two part blog. This week we\u2019re going to define options and the parameters traders need to consider before trading them. Next week, we\u2019ll dive into the math behind options. You may need whiskey at some point. First, what is an option? Let\u2019s keep this very simple. An option is a contract to buy or sell a market at a pre-determined price by a certain date (direction and duration). There are call options which the buyer purchases anticipating a bullish trend\u2026 and there are put options which ideally profit during bearish trends. These options come with risk limited to the \u201cpremium\u201d (price paid for the option) and unlimited profit potential (to the moon). Aanndd\u2026 that\u2019s where the simplicity comes to an end. For every buyer of an option (whether it be a call or a put), there must be a seller of the option. When you go long by purchasing a call, someone on the other side thinks you\u2019re wrong (you likely are). They have to sell that call option to you which is referred to as \u201cwriting a call.\u201d Unlike purchasing options mentioned above, writing an option comes with unlimited risk and limited, pre defined, profit potential. This is called being \u201cnaked.\u201d Accounts that write options often come with significantly higher minimum requirements and restrictions imposed by a broker. More than 99% of all option writing is done by institutions\u2026 the big boys. To complicate things even more, one can be bullish not by just buying a call or writing a put\u2026 but options strategies can also be created with a covered strategy, a straddle, a strangle, a spread, a butterfly, a collar, or a married option. These strategies can be used to mitigate risk, elongate the curve and pre define the specific scenario in which you win or lose. They can also overcomplicate a situation where you already have virtually no chance of profiting. It\u2019s enough to make your head spin. And don\u2019t even get us started on binary options. You might as well just hand your money to someone else when trading those. To make matters even worse\u2026 there are the Greeks. Beta, Delta, Gamma, Theta and Vega. Time decay, interest rate sensitivity, volatility, hedge ratio, rate of change (and the rate of change of the rate of change\u2026 something we use a lot), and a frightening amount of math. Options are complicated. They require a long history of education and understanding. They demand an enormous amount of math (and physics in some cases). And they are not for you if you see them your salvation or return to glory. But\u2026 (and that\u2019s a big But), with all of that said\u2026 options trading can be for you if you have the time and patience to understand the peeks and pitfalls. Options trading can be for you if you have a strategy\u2026 a systematic and unemotional one that predefines when and if you go long and for how long (direction and duration). Options trading is realistic as long as you don\u2019t see it as a lottery ticket or a way to dig yourself out of a hole. Next week, we\u2019ll get into the math and physics behind options pricing. More of the Greeks, some Black-Scholes and even some of the links to Gauge theory. Optimize your trading with fractalerts! Want to learn more about how math and physics can improve your trading (even with options)? Take a more analytical look at the markets and remove the emotion\u2026 and misperceptions that run infectiously through the minds of most traders. Fill in the form on our home page and a member of our team would be happy to give you a call or engage via email.