Learning Options with Paper Trading
Master options trading risk-free using Ape AI's paper trading account.
⏱️ Time: 30-60 minutes to set up, ongoing practice 💰 Risk Level: Zero (virtual money only) 📱 Platform: iOS & Web 👤 Best for: Anyone new to options trading 🦍 Recommended Companion: Maverick (options/momentum focus)
What You'll Learn
How to set up and use paper trading
How to practice options trades without risk
How to learn from mistakes safely
How to build confidence before real money
When you're ready to transition to live trading
Why Paper Trade Options First?
The Reality of Options
Options are complex and risky:
Can lose 100% of investment
Time decay works against you daily
Requires understanding of Greeks (delta, theta, IV)
Need to manage entries and exits precisely
Psychological pressure with real money
Paper trading lets you:
✅ Learn mechanics without financial risk
✅ Test strategies in real market conditions
✅ Make mistakes and learn from them
✅ Build muscle memory for order entry
✅ Develop emotional discipline
✅ Track performance over time
Who Should Paper Trade?
Mandatory for:
Complete options beginners
Anyone who hasn't traded stocks before
People unfamiliar with order types
Those unsure about risk tolerance
Recommended for:
Stock traders new to options
Testing new options strategies
Learning a new platform
Recovering from losing streak
💡 Industry Standard: Professional traders paper trade new strategies for 3-6 months before risking real capital.
Before You Start
Prerequisites
✅ Account Setup
Ape AI account created
Comfortable navigating the app
Basic understanding of options (calls/puts)
✅ Knowledge Requirements
Read First Options Trade → guide
Understand what calls and puts are
Know basic options terminology
Comfortable with risk of 100% loss
✅ Mindset
Treat paper money like real money
Take it seriously (no YOLO trades)
Track and analyze every trade
Focus on process, not just profits
What You Need
30-60 minutes for initial setup
Commitment to 20+ paper trades before going live
Discipline to follow your trading plan
Willingness to learn from losses
Step 1: Set Up Paper Trading Account
Enable Paper Trading
On Web:
Go to Settings (gear icon)
Navigate to Paper Trading section
Toggle "Enable Paper Trading"
Set starting balance (recommended: $10,000)
Confirm activation
On iOS:
Tap Profile icon (bottom right)
Tap Settings
Scroll to Paper Trading
Toggle "Paper Trading Mode"
Set starting balance
Confirm activation
Starting Balance Recommendation
$10,000 is ideal because:
Realistic for many traders
Enough for proper position sizing
Not so large you ignore risk management
Allows for multiple positions
Don't start with $100k+ paper money:
Unrealistic for most traders
Encourages bad habits
Won't translate to real trading
Makes risk management meaningless
Verify Paper Trading is Active
Check for indicators:
🟢 Green "PAPER" badge in top corner
Paper balance displayed in portfolio
"Paper Trading Mode" shown in settings
All trades marked as paper trades
⚠️ Important: Always verify you're in paper mode before placing trades! Double-check the indicator.
Step 2: Create Your First Paper Options Strategy
Start with Simple Strategies
For Your First 10 Paper Trades:
Strategy 1: Long Calls (Bullish)
Buy call options on stocks you're bullish on
Practice strike selection
Learn about time decay
Understand breakeven
Strategy 2: Long Puts (Bearish)
Buy put options on overvalued stocks
Practice timing entries
Experience how puts behave
Learn profit taking
Avoid Complex Strategies Initially:
❌ No spreads (bull call, bear put, etc.)
❌ No iron condors or butterflies
❌ No selling options (writing)
❌ No multi-leg strategies
Why simple first:
Master the basics
Understand one variable at a time
Build foundation
Avoid confusion
Select Your First Paper Trade
Go to Chat with Maverick:
Type this prompt:
Maverick will provide:
Stock recommendation (liquid, high volume)
Strike price suggestion
Expiration recommendation
Entry strategy
Exit plan
Risk/reward analysis
Example Setup:
Step 3: Execute Your First Paper Trade
Review the Setup Thoroughly
Before placing the trade, verify:
✅ Understand the Thesis
Why is this trade setup bullish?
What catalysts support the move?
What could invalidate the thesis?
✅ Greeks Make Sense
Delta 0.40-0.60 for balanced
Theta not too high (avoid weekly options)
IV not extremely elevated
✅ Position Sizing is Appropriate
Max 5-10% of paper account per trade
Can afford to lose 100%
Enough capital for multiple trades
✅ Exit Plan is Clear
Profit target defined
Stop loss level set
Time stop planned
Place the Paper Trade
From Maverick's Trade Setup Card:
Tap "Execute trade" button
Verify trade details:
✅ Ticker: AAPL
✅ Type: CALL
✅ Strike: $175
✅ Expiration: Dec 15
✅ Action: BUY TO OPEN
✅ Quantity: 1 contract
✅ Order Type: Limit
✅ Limit Price: $6.50
Double-check: 🟢 PAPER MODE indicator visible
Confirm order
Wait for fill
Order Types for Paper Trading:
Use Limit Orders (Recommended)
Practice proper order entry
Learn about bid/ask spreads
Develop patience
Realistic fills
Avoid Market Orders
Even in paper trading
Build good habits
Practice limit order management
Document Your Trade
Immediately after entry, record:
💡 Tip: Keep a trading journal for EVERY paper trade. This is essential for learning and improvement.
Step 4: Manage Your Paper Position
Daily Monitoring Routine
What to check daily:
Morning (Pre-market):
Stock price movement overnight
Any news or catalysts
Option premium if available
Plan for the day
During Market Hours:
Price action at key levels
Volume patterns
Option value changes
Greeks evolution
End of Day:
Close price vs entry
P&L update
Journal notes
Thesis still valid?
💡 Important: Don't micromanage intraday. Check 2-3 times max during market hours.
Track Your Progress
In Ape AI:
Go to Portfolio tab
View paper positions
See current P&L
Track Greeks changes
Monitor time decay
In Your Journal:
Update daily P&L
Note key price levels
Record emotional reactions
Document decision points
Example Daily Update
Step 5: Exit the Trade
Following Your Exit Plan
Scenario 1: Hit Profit Target
Scenario 2: Hit Stop Loss
Scenario 3: Time Stop Triggered
Recording the Full Trade
Complete Journal Entry:
Step 6: Repeat and Refine
Your First 20 Paper Trades
Goals for practice:
Trades 1-5: Learn Mechanics
Get comfortable with order entry
Understand how options move
Experience time decay
Practice journaling
Trades 6-10: Develop Discipline
Follow your trading plan
Take profits at targets
Cut losses at stops
No emotional decisions
Trades 11-15: Refine Strategy
Try different timeframes (14-45 DTE)
Test various strikes (ITM, ATM, OTM)
Practice position sizing
Improve entry timing
Trades 16-20: Build Consistency
Track win rate
Analyze average R:R
Identify patterns
Develop edge
Track Your Performance Metrics
After 20 trades, calculate:
Win Rate:
Average Return:
Risk/Reward:
Profitable Strategy?
Common Paper Trading Scenarios
Scenario 1: Quick Win (Up 50% in 2 Days)
What happened:
Entered NVDA $500 call at $8.00
Stock gapped up on earnings
Call now worth $12.00 in 2 days
What to do:
✅ Take profit! Don't wait for more
✅ Journal: "Why did this work so well?"
✅ Note: Can I replicate this setup?
⚠️ Don't expect every trade to be this easy
Learning:
Catalyst-driven moves are powerful
Quick profits are fine to take
Don't develop unrealistic expectations
One lucky trade ≠ sustainable edge
Scenario 2: Slow Bleed (Down 30% Over Week)
What happened:
Entered AAPL $180 call at $5.00
Stock went sideways, no movement
Call now $3.50 from time decay alone
What to do:
✅ Close if stop hit
✅ Journal: "Thesis didn't play out"
✅ Accept the loss
⚠️ Don't add to losing position
Learning:
Time decay is real and relentless
Need catalyst/movement for options
Sideways = slow death for options
Cut losses early saves capital
Scenario 3: Thesis Changed Mid-Trade
What happened:
Entered bullish call on tech stock
Fed announced rate hike
Entire sector selling off
What to do:
✅ Exit immediately
✅ Thesis invalidated
✅ Don't hold hoping for reversal
✅ Journal: "Macro event changed setup"
Learning:
Macro events override setups
Flexibility is key
No shame in exiting when wrong
Preserve capital for next opportunity
Scenario 4: Near Expiration (3 Days Left)
What happened:
Position still open 3 days before expiration
Slightly profitable but not at target
Time decay accelerating
What to do:
✅ Close TODAY
✅ Don't hold into expiration week
✅ Take current profit/loss
⚠️ Never let options expire
Learning:
Time management is crucial
Last week decay is brutal
Better to exit early than hold too long
Always have calendar awareness
When to Transition to Real Money
Minimum Requirements
Before trading options with real money, you must:
✅ Completed 20+ paper trades
Minimum track record
Multiple market conditions
Various outcomes experienced
✅ Win rate > 50%
Positive expectancy
More winners than losers
Sustainable approach
✅ Positive P&L over 20 trades
Net profitable
Losses controlled
Wins outweigh losses
✅ Following trading plan consistently
Journaling every trade
Honoring stops
Taking profits at targets
No emotional decisions
✅ Understanding risk management
Position sizing < 5% per trade
Risk of ruin understood
Comfortable with 100% loss
Only risking money you can afford to lose
✅ Options approval from broker
Level 2+ options trading
Account minimum met ($2,000+ recommended)
Understanding of risks acknowledged
Additional Readiness Signs
You're ready when:
Paper trading feels boring (good sign!)
You can explain your edge
Losses don't frustrate you emotionally
You have a systematic process
You're patient with setups
You journal without being reminded
You're NOT ready when:
Still making impulsive trades
Revenge trading after losses
Ignoring stop losses
Overleveraging positions
Chasing momentum plays
Can't explain why you're in a trade
Transitioning Strategy
Start small with real money:
Phase 1: First 5 Real Trades
1 contract per trade only
Same strategy from paper trading
Keep journaling
Higher emotional stakes
Phase 2: Next 10 Real Trades
Still 1 contract per trade
Refine based on real money emotions
Track performance vs paper trading
Adjust for slippage and fees
Phase 3: Scale Gradually
If profitable after 15 trades
Increase to 2 contracts
Never jump from 1 to 5+ contracts
Slow scaling reduces risk
💡 Important: Many traders are profitable in paper trading but lose with real money due to emotions. Start VERY small!
Advanced Paper Trading Techniques
Strategy Testing
Once comfortable with basics, test:
Different Timeframes:
Weekly options (7 DTE) - high risk
Monthly options (30-45 DTE) - balanced
LEAPS (6+ months) - lower risk
Different Strikes:
Deep ITM (delta 0.80+)
ATM (delta 0.50)
OTM (delta 0.30)
Far OTM (delta 0.10) - lottery tickets
Different Market Conditions:
Bull market (trending up)
Bear market (trending down)
Sideways/choppy (range-bound)
High volatility (VIX > 25)
Low volatility (VIX < 15)
Performance by Market Condition
Track your results:
Insights from tracking:
Know which markets suit your style
Avoid unfavorable conditions
Play to your strengths
Reduce trading when edge is low
Common Paper Trading Mistakes
❌ Don't Do This
1. Not taking it seriously
"It's fake money, who cares"
Making YOLO trades
Ignoring risk management
No journaling
Why it matters:
You learn bad habits
Won't translate to real trading
Wasted opportunity
False confidence
2. Using unrealistic capital
Starting with $100k+ paper money
Position sizing too large
Trading 10+ contracts per trade
Ignoring account size
Why it matters:
Won't have that capital in real life
Risk management meaningless
Can't replicate with real money
Builds unrealistic expectations
3. Overtrading
5+ trades per day
Not waiting for setups
Trading out of boredom
Chasing every move
Why it matters:
Quality > Quantity
Best traders are selective
Overtrading = commissions/slippage
Exhausting with real money
4. Ignoring fees and slippage
Paper trading often has perfect fills
No commission costs
No bid/ask spread
Instant executions
Why it matters:
Real trading has friction
$1-5 per contract in fees
Slippage on large orders
Options can be illiquid
5. Not journaling losses
Only recording winning trades
Ignoring what went wrong
Not analyzing mistakes
Cherry-picking results
Why it matters:
Learn more from losses than wins
Patterns repeat
Need to fix leaks
Self-deception hurts
6. Switching strategies too quickly
Try calls for 2 trades → puts
Try weekly options → monthly
No consistency
Chasing whatever worked last
Why it matters:
Can't develop edge
No statistically significant sample
Confusion about what works
No foundation to build on
Paper Trading Resources
Track Your Progress in Ape AI
Portfolio Tab:
View all paper positions
Track paper P&L
See Greeks real-time
Monitor time decay
Chat with Maverick:
Maverick can:
Analyze your paper trading history
Identify patterns in wins/losses
Suggest improvements
Recommend better setups
External Resources
Trade Journaling:
Spreadsheet template (Google Sheets/Excel)
TraderSync (advanced journaling)
Edgewonk (statistical analysis)
Options Education:
Ape AI's Options Greeks Explained →
Tastytrade free options courses
CBOE options education
Market Practice:
TradingView for charting
Think or Swim paper trading
Webull paper trading
What's Next?
Continue Learning
After your first 20 paper trades:
Expand your skills:
Test new strategies:
Ask Maverick for Guidance
Helpful prompts:
Success Checklist
Before transitioning to real money options trading:
✅ I completed 20+ paper trades
✅ My win rate is above 50%
✅ I have positive overall P&L
✅ I journal every single trade
✅ I follow my stops and targets
✅ I understand position sizing
✅ I'm comfortable with 100% loss risk
✅ I have options approval from broker
✅ I'm starting with 1 contract only
✅ Paper trading taught me emotional discipline
Remember: Paper trading isn't about making fake profits. It's about learning the mechanics, building discipline, and developing a systematic edge BEFORE risking real capital. The best traders spend months (even years) paper trading before going live. 📈
Take your time. Learn the craft. The market will still be here when you're ready.
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