Learn stocks trading first. As an example, if you want to trade QQQ stock options, you have to analyze QQQ stock and not QQQ options as options price depends on the price of an underlying stock.
As I understand you want to swing trade. Logical would be use technical analysis. Still there are some strategies that use swing trading at the moments of announcement of fundamental reports and news. So, it is up to you what to chose.
The main advice, if you really decided to go into options trading, start with the amount you are not afraid to lose.
Options trading can be much more riskier than stocks, and it can also be much less riskier than stocks. As a 28 year trader of options and futures, with an emphasis on swing trading, I would strongly advise you to never trade stocks, but to use options as stock substitutes. Only buy in the money options, with minimal time premium over intrinsic value. This is ideal for swing trading. Of course, you need to do some analysis of the option greeks, and avoid highly over-priced options.
Your chance of making a profit from options is practically nil (World Cup terminology) unless you have "inside" information.
If you are relying on guts (or feeling, intuition, wishes) - apply the same logic and buy lottery tickets and gauge your results after 2 weeks.
Anything you read or hear, regarding stocks, is "tainted" info. Many people have known for several hours, days or weeks, of what you "just found out". You are at a great disadvantage making investments based on "old" news.
Don't start with options until you can figure out stocks. There are a lot more factors to keep in mind when options trading as opposed to stock trading.
That, and don't forget the inherent risk of day-to-day delta and theta inconsistencies over the short-term, if you're planning to trade options.
Note that options basically work similarly to stock trading, except that it's a different way to invest. It uses the same fundamental and technical analysis you would perform with stocks.
The smart way of investing in options is to consider them as a sort of downpayment to later sell or exercise them after a few weeks or months has passed and the stock's already gained by much. That is a much better way to invest.
It's definitely tempting to trade options, due to the high returns and low capital requirement, however, the biggest bottleneck you'll come across are the commissions fees, which are usually much higher than stocks. If you aren't investing them long-term, and your trade fails, you'll be holding onto a really dangerous losing position, in addition to the lost commissions.
It`s as if you can`t swim and are proposing to swim across the Pacific Ocean,but hey, good luck.
I've been studying technical analysis recently because I've been thinking of trying my hand at swing trading.
I think I would rather get into options though. Does options use fundamental analysis or technical analysis?
Any book recommendations would also be very much appreciated.
