Use limit order when you sell to close option contract

Few months ago, I start to learn investing option thru various sources. I make my first purchase back in sept (check it out) and result has been very rewarding so far. The more I understand and trade option, the more I view stock as riskier business. I 'd devote more of my energy and capital in fine-tuning my option method in the next few months. Tonight, I want to share one of the idea I learnt when I sell option. It is a bad idea to use market order when you sell to close option contract because you never know what exact price your broker offer you. The spread (difference between bid and ask) could be huge and you may end up not making much profit if your broker offer you a low bid price as your sold price. The better way is use limit order. You enter a price in between the bid and ask as your sold price. Your broker may not be able to sell it for you right away, but the advantage is that you know exactly how much price you sell for and your bottom line profit. This is my real life example of a option I just bought for $2.00 per contract
Bid : $2.10
Ask: $2.40
As you can see, the spread is $0.30. If I put a market order , I'd be most likely get a sold price around $2.10. This means my profit is only 5%! Not too attractive. Instead, I put a limit order with a price $2.30. The order didn't go thur immediately. It takes about 2 hours. But I 'm able to make 15% return of investment once the order executed.

Covered call Vs Call option

Tonight, I want to share some of my research on investing stock options. In particular I focus on CALL options, which is generally works the best when market condition is a rising bull market. You don't want to do CALL option when the market is sinking downward.
Price: For writing covered call purpose, first you must own the underlying shares of stock. Because each contract require 100 shares, the amount required to invest is reduced if the stock price is lower (<$20). Plus, the power of leverage will work better. For call option, you want the stock price higher (>$50) because they are less volatile on downside and solid on the up side.
Option Period: You don't want your option to be "call out" when you're writing covered call, so you'd like the period as short as possible. On the other hand, you want to give it more time to comes up in value when you're buying option call
Risk Level: Covered call is less risk since you're owning the actual stock. You can always wait for stock to bounce back. But in call option, when stock price drops, AND you're near expiration day, you could have high probability of losing your entire investment (premium)
Type of stock: You want a slow price appreciation in covered call because you don't want to get call out. But you want the fast price appreciation type of stock in buying call option to get the maximum gain
Potential return: Every time you write a covered call, you have limited the gain you could make. Your gain is equal the sum of premium you receive plus the difference between strike price and your purchase price. In option case, your return is unlimited, depending on how much stock risk before your options expire
Strike price: The closer the current price, the more premium you will received in covered call case. In opposite, the further out of money, the less you 'll pay for the option premium.
That's all the points I 've summarized as a guideline for investing call options. Hope you'll find it useful.

23.3% return in less than 20 days

Tonight is an exciting night for me! I make my first profit in trading option! I make an awesome 23.3% return in less than 20 days by holding this ETF EWH. 2 months ago, I met a friend who is a option trading guru, he told me once I understand how the option trading work, I will never go back to trade stock. After briefly listening to his wisdom, I decide to dig in more the subject and learn by just doing it. The result was very rewarding. For those who has never trade option before, let me give you a few ideas to get started.
1) Talk with your friends who has experience on this subject and ask how he/she did it (Remember, your network determine your networth. It's time to build your network and get to know more people with experties in trading option)
2) Go to http://www.888options.com/ for great online option education. Most of the class there are free and very informative. You should gain a solid foundation after taking class over there.
3) Keep it simple. Focus on 1 to 2 strategy to do your first option trading to gain some experience how it works. I'd recommend buying call at a lower price with longer expiration date, and sell it at a later higher price as your first trade. Once you understand the mechanism, you may consider more advanced method like writing call or buying put.
4) With tremendous amount of information online and offline (books) on this option topic, you really don't need to spend huge amount of money to just get started and understand how it works. Learn as much as you can without spending too much money on some ebook or get rich quick program. It's not something you need to have a degree in order to make money out of it.
5) Talk to your broker and apply an account to trade option. I gain tremendous information from my broker when I took the time to visit his office. He give me useful advice and a little booklet that I can read and learn. They're very willing to teach you, because they want you to trade as often and as successful as possible.
6) Just do it. Start small, (keep it less than 500 bucks) just to test water and observe.
Good luck in your learning curve in option trading. It could be a powerful way to leverage your way to wealth!