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 frame of days, rather than months or years!
Market (& Risk) Friendly
Whether the market is moving up, down or sideways — you can use options to work in all markets — in short — you can make money in any market. You can soften the fall or even make money in a down (bear) market, outperform the market as it rises upwards (bull) and even generate income in a flat or sideways market. While this should not replace your traditional investing and trading — use it as a way to boost your performance, who knows… you might make it a habit!
Trade options not as a speculator but as an investor. That means that you don’t just jump in and out of a position, there’s some research to find out fundamentally strong companies — that have a good chance of generating returns for you. By doing this, you’re leveraging your knowledge of the company to boost the returns. You could just as well buy the stock, but it would take longer to generate the kind of results you’re looking for.
When you buy or sell options, your profit is usually unlimited. You can often make between 50% and 100% gains in a matter of weeks, sometimes days. This is why so many are interested in options trading (hint: you’re reading this!). Whilst it may sound too good to be true, there’s a downside to it. Just know for now that the reason you can make so much money with options trading is because of ‘financial leverage’. This is a financial phrase — that just means taking a small amount of money and multiplying it into a larger sum. The multiplying factor is the ‘leverage’.
Because each option ‘contract’ represents 100 shares of the company, an investor or trader can control and benefit from that many shares without risking too much capital. A small move in the underlying stock of the company can create a big move in the option contract. In short, investors often buy call options rather than the stock outright to obtain leverage and potentially boost their returns, whilst limiting potential losses.
Did you know…?
Options were created as a form of insurance — yes, insurance. Just like you have insurance for your car, house, and other assets — a few people wondered why we couldn’t have insurance for ‘stocks’ — it is in any case an asset right?! And so that how options were born… do you know any particular investor who built his wealth with insurance?
Keep reading, you’ll find out below! The first options were used in Greece in 300 BC — by an olive speculator. The Chicago Board Options Exchange (CBOE) was instrumental in allowing options to be traded in its current form and we have to thank them for this opportunity!
But what about the common man? What about the person who dreams of wealth… everyday? As Dave Ramsey put it, “If you do what rich people do, you will become rich, if you do what poor people do, you’ll become poor”. It’s that’s simple. Rich and Ultra-Rich people understand options trading… and take advantage of these tools for asset protection and accelerated wealth generation.
It’s not uncommon to make 40% — 50% returns, but you can also lose up to 100% if you’re not familiar with the strategies shared below. This is what they don’t teach you in business school! Don’t worry, it’s ok to be a bit skeptical — the proof is in the pudding and you’ll soon see how you can develop this skill very soon.
So is option trading risky? Hell, yeah. But the rewards are well worth the risk. You can and dare say — will lose money, but fear not — you can maximize those profits and minimize those losses. If risk is holding you back from making money, seriously, stop reading and do something better. Ok, excited? Still reading… let’s get started.