The big advantage of trading options is that you can wield outstanding leverage no matter how simple or advanced the strategy, but (and here is the key) you can do so with limited risk.

You can only lose what you pay for the options, and that can be a small amount. In general, the biggest loss you take on any individual option trade should only be about 30%, and that loss should only be on a small investment.

Talking about taking losses — no matter how small — isn’t pretty. And taking them isn’t that much fun, either. However, managing losses is key to the “other side” of that equation — that is, making money on successful trades.

The key advantage of options trading gives you a way to buy stocks at a lower price. In a word, you invest less — which can mean, in turn, that you position yourself to make much-bigger-percentage profits.

But, like all miracle drugs, options must be used with prudence and proper care. While the stock investors who fear options might go “cold turkey” and abstain from using them, it’s clear that they are working off a (very real) assumption — that, if you overdose, options can be dangerous to your financial health.

However, the advantages of options trading can far outweigh the side effects, if you’re mindful of reaping the benefits when they’re working and of giving them up when they’re not as beneficial as you had hoped.

So, what are the keys to astoundingly big and easy options profits? I have developed 10 simple “commandments” that you can use to position yourself bank money in both bull and bear markets.

1) Be patient. You must wait for options to become underpriced. There are many opportunities out there, but if you want the best-possible risk-vs.-reward picture, look for stocks that are about to break out (or break down) and buy their options cheap and sell them when they get up and run.

2) Diversify. Don’t put all your eggs in one basket. Try to invest the same dollar amount in different positions, to lower your risk. Also, buy puts and calls on several stocks in myriad industries, and be sure to spread your purchases throughout a 12-month period so that you’re profiting year-round and/or so that you’re not getting hit with losses all at once if the market hits a rough patch.

3) Minimize your risk. Pay as little as possible for each option. And always be ready to cut your losses should the need arise. Generally you should sell a losing option if it drops by 50%.

4) Plan before you play. If you do not have a game plan for when you will enter and exit a trade, it will be more difficult to consistently turn a profit.

5) Don’t be greedy. The downfall of 90% of all options investors is greed. If a trade runs up and the stock pulls back 3%, close the position and enjoy your profits. Otherwise, the stock might keep dropping and you may take less of a profit or even a loss.

6) Maximize your leverage. One option contract controls 100 shares of the underlying stock. Try to find options that will increase in value by at least 100%, which is a perfectly reasonable expectation if the underlying stock moves up by even just a few points.

7) Buy options on high-volatility stocks. Because options expire, you only get a limited amount of time to work with. So, your best plays are on volatile stocks that move within wide ranges of their base values.

8) In general, buy out-of-the-money options. They normally have lower prices, and as a result they also tend to come with less risk. But don’t buy them too far out-of-the-money — it’s one thing to bet on a stock moving, but it’s a fool’s game to expect an unrealistic jump (or drop) within a short time frame.

9) Don’t overpay. Successful option buyers are meticulous bargain-hunters. Wait for your price and don’t be afraid to pass on a trade that seems too expensive — there are always new trading opportunities coming available.

10) To everything, there is a season. That is, earnings season, conference season, new-product season, etc. In our second commandment, we encouraged you to spread your option purchases throughout the year. However, keep in mind that there are slow seasons and busy seasons, so be ready to take advantage of “extra” opportunities by saving up for them rather than buying options just for the sake of doing so.