Make no mistake about it: trading stock options is difficult game and you would do well to use any additional trading tools that you can get your hands on, in the name of increasing profitability. Ones you get a good explanation of the basics of stock options, the simple fact is that you’re not necessarily any closer to achieving consistent profits when trading them.
One form of help that many people and virtually all professionals use is free stock option software; it will help you level the playing field while trying to profit from this difficult, though potentially very lucrative, type of investment.
A simple search will reveal several different kinds of options trading software. While the interface will look different from tool to tool, what you are really looking for is the ability to type in a stock symbol, i.e. for the underlying stock, and have the entire options chain of expiration dates as well as all strike prices represented to you as a table or 2-D graph, or even in 3-D format.
The point of this software is that you want to maximize your potential gains by getting into the very best contract that you can, once you are convinced that a certain stock will move up or down in the future.
The fact is that with options not every contract is created equal; some are so far out of the money that the cost of the premium would not justify buying it, but on the other hand your options trading software can reveal when that same contract is priced attractively.
Another area where this trading software really shines is in helping you analyse more sophisticated options strategies such as spreads and straddles. With these methods it can be very difficult for neophyte investors especially to quantify exactly how risky a position is, as with them you are buying and selling combinations of different expiration dates and strike prices for a given underlying stock.
The software in this case can give you a simple graph of your break even points and profit/loss regardless of where the price of the stock goes, and being able to visualize this quickly is of great benefit when you are considering entering an options position.
Before you pay for stock options software, be sure that you look at the free packages that are available to you. Frankly, some are so sophisticated that paying for software of this kind is probably unnecessary for most investors.