Straight to the Source

Another good educational site is SpreadTradeSystems. As the name implies, this online option educational service emphasizes using limited risk/reward strategies to achieve consistent returns. The hook it uses to differentiate itself is that you must pass a test and "graduate" from each class before being allowed to advance to the next course level. This is a nice nod to the fact that option education is incremental and a process that builds upon itself rather than a singular event. It's also a smart business decision for keeping its clients from getting ahead of themselves and blowing all their tuition money on a bad trade.

Moving along the food chain, some subscription-based sites that have very advanced screening software, historical data downloads and analytic programs also happen offer some of the best free tools.

For example Chartbender.com's educational segment, the Options Knowledge Exchange, has a great scroll-down toolbar that peels back to explain in both text and graphics the pricing behavior and profit/loss of various strategies during given time frames and volatility environments.

Another is iVolatility.com, which, as the name implies, focuses on volatility data. It offers free, though delayed, information on all listed options. This is where I go to get the first look at the historical and implied volatilities of a stock and its options. Its free option calculator has become the industry standard used by everyone from the Chicago Board of Options Exchange on its website to many of option-focused brokerage firms such as TradeKing.

Now to the fun stuff ... the recent proliferation of option-related blogs. Not only are these great reading by themselves, but part of their value is that they will lead you to even more places to click along to. One of my favorites is DailyOptions from Adam Warner. He not only provides keen option insight three or four times a day, using his independence to take on everything from CNBC and our own Jim Cramer, but he has an uncanny knack for finding an appropriate video on YouTube to accompany the written material.

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Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.

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