How to trade options in the US stock market? How can one achieve high returns with low risk?

Basically, there are two types of options strategies (all options mentioned here are referring to Calls): short-term options (buying Calls) and long-term options.

For short-term options, the focus is on buying Calls with a short expiration period, typically daily options. These options offer the smallest risk (as they require minimal capital) and the highest potential returns (due to the leverage factor).

On the other hand, long-term options function similarly to stocks, as they don't require frequent trading and offer significantly amplified returns.

The main difference between long-term options and stocks lies in time decay. For instance, in recent market conditions where the overall market or leading stocks have been trading sideways for two months, long-term options can be significantly affected.

The most critical requirement for short-term options is to accurately grasp short-term trends. Since the holding period is very short, it's essential to monitor closely, as opportunities may arise overnight. Otherwise, profits can quickly turn into losses due to the substantial difference between the option's in-the-money and strike prices.

Those trading short-term options must have sufficient free time to monitor the market actively. Typically, there are 1-2 very lucrative short-term options opportunities per week. For example, in the past few weeks, there have been three major short-term buying opportunities, whereas the week before that was relatively quiet, with only minor buying points.

My personal favorite for short-term options is QQQ $Invesco QQQ Trust(QQQ.US)$ , as it acts as an ATM for our system, offering stability and consistency. QQQ's volatility is higher than SPY's but more stable than individual stocks, making it easier to trade with focused attention.

At its core, options trading addresses two key questions in the US stock market:
1. Are the major players willing to buy? This is indicated by various indicators of market, stock, and sector buying trends.
2. Is the cost of buying high? This is determined by institutional holding costs and short-term chip concentration indicators.

Options trading, especially short-term options, represents the highest level of trading in the US stock market. It requires a mature understanding of market sentiment, experience, trading systems, and data. Therefore, for beginners, it's essential to be patient, gradually progress, reference data, start with small capital, and then gradually scale up as profits stabilize.