The great primer on trading options is here.

And I want to add few lines on my own. I want to suggest another trading rule, which is not popular at all.

I think when you buy out-of-money options you must treat it strictly as insurance, i.e. you hope to lose money on that position, not earn. Compare it to life insurance. When you buy life insurance your goal is to actually see it to expire worthless 🙂

If you want to actually win on your option trade you must buy a deeply in-the-money option that is actually above (or below) all reasonable resistance (support) levels so that it expires worthless only in the case you’ve made some exceptional, spectacular mistake and not just being a bit unlucky