Unfortunately many Traders use Options as an extension of how they Trade Futures using only the limited Risk and Leverage which they provide. That's a pity because there can be so much more. Here is how I look at an Options Trade
First you have to have a view on an underlying. The view can come from TA but it can also come from fundamentals, statistical analysis or a quant based model. The entry and exit rules can be far more flexible than those used by Technical Traders
Next you need to formulate a Trading Plan. What is the Range that you expect the underlying to Trade in, what is the amount of Risk you want to take on the Trade, how much Capital do you wish to deploy and a contingency plan if things go horribly wrong
Now you need to express this plan by crafting suitable Option Strategies that will give you the maximum bang for your buck. You have to use the other dimensions that Options provide- Time and Volitility- to maximize your odds.
Options Theory allows you to take into account the POP- Markets view on the odds that your Trade will make Money- and so you can design Strategies based on your level of Risk Tolerance keeping in mind that Risk and Reward are closely intertwined.
Finally there is the execution. After punching in your orders, you have to bear the psychological trauma of watching your MTM fluctuate and managing or exiting the Trade at an appropriate time. It is this entire process that I find so thrilling and challenging
People can have different views on the same underlying and even if they have the same view, there are countless ways of expressing them in a Trade depending on your own belief system. That is why each Trader needs to learn the art of designing his own Trades
Books, Seminars and Videos will allow you to master the tools that you need to build a Trade but the Trader himself needs to develop the skills to use these skills to design the many elegant and workable structures that are needed day after day to be successful and consistent.
So while it's good to look at Trades of successful Traders with a view to understanding the thought process that goes behind them, aping them leads nowhere. And looking at ideas where someone merely tells you to buy at x with SL at y and Target at z is an exercise in stupidity
