Making outstanding stock option picks with great profit potentials and low risk, whether the market is up or down, is a challenge these days. But it’s not necessarily impossible. Success for any trader depends on diligent market research and a thorough understanding of stock option fundamentals.

First understand, that when looking for profitable trading opportunities, you don't have to do all the work yourself. There are many services these days that offer guidelines and various research to help traders with shortcuts. And there are news aggregators that put all the relevant fundamental data all in one place. There are also professional analysts make stock option picks, though now it is more common for self-directed traders to make their own stock option picks and not pay the costly fees associated with this sort of service.

Whether you do your own research or rely on someone else for your stock option picks, its essential to understand some basic facts about options trading.

Making stock option picks based on individual stock assessment requires an understanding of specific fundamental parameters. Traders should learn how to read annual reports and 10K stockholders reports for income statements, past earnings, sales, assets, new products, and overall industry trends.

Stock option picks based on technical analysis require the investor to examine the historical price movement and volume in order to determine price patterns and extrapolate future price movements. There are certain technical patterns all traders should know. Probably the most important is support and resistance.

Support is when a stock fell to a certain price on two or more occasions and formed “bottoms” at that same price and then “bounced” higher. Resistance is when a stock rose to a certain price on two or more occasions and then bounced off and fell lower. These points indicate where the big money was placing their buy and sell orders. That is, after all, why the market changed course at those points: Because of buying or selling pressure. 

Stock option picks based on broad market analysis examines overall activity based on performance indices. Is the overall market bullish (moving up), bearish (moving down) or neutral (moving sideways)?

Stock option picks based on psychological market indicators attempts to interpret the facts and gauge whether a change from bullish to bearish (or vice versa) is in the wind. Successful options traders are frequently contrarians who buy puts in a bullish market and purchase calls in a bearish market – against convention.

All this requires skill. Visit TradersExclusive.com for, blogs, articles and complimentary webinars to learn the skills you need to succeed in your trading.