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In my opinion Lawrence G. McMillan has been the best authority on options trading for years.

 

Here's some info:

http://www.o...s/index.html

 

Two ideas:

1. Volatility usually rises during a dropping market. That means that just the time you would want to buy options they are getting more expensive. That's why buying stock and selling calls (covered calls) is my preferred strategy.

 

2. Look for cheap options not cheap stocks. If you think a stock is underpriced buy the stock. If you think an option is underpriced buy the option.

 

3. Buying options is completely different than buying stocks. Quite often you can buy a stock and sell a call and get a 100% annualized return even if the stock remains unchanged.

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