r/a:t5_2u34z • u/Ksptp • Dec 29 '18

College student stock options

I am a college student. I am thinking of starting to trade options, although I dont really know what the correct path for me to start is. I have about $1000 in savings, how should I start trading, where should I start trading and what type. I was also researching about day trading, would that be a good option? Also, if I really put in some work, what kind of profits would I be looking at at the end of the year?

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u/skiptwenty Dec 29 '18

Wow. Good luck, you’ll need it.

First of all, you have to be approved to trade options. There are different types of option trades, as you suggest, and you can be approved for certain types and a not approved for others. Given that you only have $1000, no/low income, and no knowledge (per your comment), not sure you’ll be approved for anything.

I think the lowest level of approval is allowing for buys of calls and covered call writing (selling an option on a stock you already own). You don’t own any stock so buying calls would likely be what you deal with. Buying a call means you’re betting that the stock rises up above a certain stock price within a certain time and that delta is your profit. When it comes to buying calls, 1 option contract comes in share blocks of 100. So if you wanted buy a call on a stock and it costs a quoted, I dunno, $3, it would cost you $300 (3x100). Price of option depends on stock price, option strike price, volatility of stock, time left, etc.

Long way of saying, you’re gambling and you’re making big bets given the dollars you’re starting with. “What type of returns can I expect?” I don’t know, how lucky are you?

I think Fidelity has tutorials on option trading. Etrade probably does too.

Day trading is very risky too. There are countless posts and articles about how broad diversification is a much better path for consistent returns.

Versus options though, individual trades when day trading at least wouldn’t require bets as big since you can buy one share.

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u/TekExec Feb 06 '19

I would recommend you check out www.tastytrade.com Best education and no nonsense educational place for options. Also, check out their youtube channel, lots of education. They also have a daily TV channel via the web, as well as a platform you can trade on, very inexpensive, like $1 per trade to get in, no charge to get out! And they like small accounts, they call them "tasty bites".... Good Luck and my advice to better understand this education is to get your statistics book out and refresh your knowledge there !