I recently was approved for an options account through Scottrade. At first options are going to seem 100x more complicated than trading stocks but I have a feeling options really are not going to be that much more difficult to learn. I would say on a scale of 1-100, where 100 is a complete understanding of options, I am about a 3 or a 4.

What I do know about options is that if you 'have a hunch' that a stock is going to double (or move drastically) in the next two months, the same options are probably going to go up between 400 and 800%. It is not uncommon at all for the right options play to jump 300% or more in one week. If you don't believe me, here is the proof, a gain of 17,530% in 24 hours, lol. Could you imagine turning $1,000 into $175,000 in less than 24 hours......

Quote:
Google Earnings Gave Options Traders a 17,530% Gain
April 18, 2009 (Bloomberg) -- Options traders who predicted Google Inc. would beat estimates earned as much as 17,530 percent on their investments today, the most-profitable bet among all U.S. equity derivatives.

Contracts giving the right to buy Google shares for $530 before the close of trading today jumped as high as $17.63 from their 10-cent closing price yesterday. That gain almost matched the 18,760 percent advance in the Dow Jones Industrial Average since the beginning of 1900, according to Bloomberg data.
On the other side of the token, if you do not know what you are doing, the options will expire worthless. I figure that when I am ready to make my first trade, I will only risk a few hundred dollars max, because chances are I will lose everything on my first trade. I am looking at Citigroup January or March $10 calls, PCX January $15 calls, UNG October $14 or $15 calls, possibly some HIG December $15 puts.

From my limited understanding, you just need your prediction to hit a week or sooner than when the options expire. For example, if you buy C January $10 calls right now in August while C is around $5, and C is trading around $10/$11 by the middle of December, chances are your investment is up 5 or 6x.

Also, if you are certain or almost certain that a bottom is in, it can be very lucrative to buy the calls a month or two out. What comes to mind is WNR (see the August 21st post). Right now it is possibly in the process of making a double bottom around $6. The WNR December $10 calls are trading for around 15 cents per contract right now. If WNR hits $10 sometime in November or early December I would venture a guess that the 15 cents being paid right now/contract would fetch about 90 cents/contract (6x) or better.

Any members that are more familiar with options please chime in on this thread....