The Zencapita Notes

"… derivatives (options) are financial weapons of mass destruction…" — Warren Buffett in the 2002 shareholder letter.Strange that Warren Buffett would say that, because rich people like him use them. Warren Buffett — the very same guy who said “options are financial

WHY: To get paid while waiting for a lower share price that you’ve been wanting to buy at and you wouldn’t mind buying at a lower price. You’re expecting the stock price to move higher (eventually) or

WHY: To earn income on shares you already own (hence ‘covered’ by you), while waiting for your desired sell (higher) price. You’re expecting the stock price to go down or stay flat, you sell a CALL option contract. This

WHY: When you believe the stock will rise significantly over time and you want to leverage your returns, or you want to minimize invested capital at risk — you buy a CALL option contract. Investors or traders often buy call options

Before you start your first trade, you need to learn how to read an ‘options chain’ or as some call it an ‘option table’. An options chain is basically a list of all available option contracts for a given stock

Ok, there’s a difference between stock ‘shares’ and stock ‘options’. With shares you get to own a piece or percentage of the company. As long as you own it, you have a “share” in the company, like…

Options are ideal for providing insurance to your stocks, protecting profits, generating income and most importantly earning outsized gains. And if you suffer from some form of ADHD, then dig this — you can do all that in a shorter time

A quick start to stock options trading. Check for links to the more detailed posts.