Tip #3:

Buy Options the Right Way

Select options that are undervalued and underpriced and are trading close-to-the-money (i.e., the stock price is trading near the strike price).

Also, look for as much time as possible before expiration. This goes for buying both calls and puts. Another way to get a good price is to find a stock that is moving within a 2- or 3-point trading range.

Try to buy cheap call options when the stock is trading at the lower end of its range and cheap put options when it is at the upper end.