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Make Money Trading Options teaches the art of trading stock options, including the pitfalls to watch out for and how to use simple tools like the Test Trading Strategy and virtual trading tools to find stocks that are most likely to be profitable, so you don’tm have to just guess where to invest.
Make Money Trading Options teaches the art of trading stock options, including the pitfalls to watch out for and how to use simple tools like the Test Trading Strategy and virtual trading tools to find stocks that are most likely to be profitable, so you don’tm have to just guess where to invest.
Imagine you’re retired with $150,000 in the bank. The only problem? You want to travel the world and pay off your mortgage — and those are expensive. You’re going to need to increase your income.
This is where options trading can come in handy. Stock options are a type of agreement known as an options contract. This contract gives you the right to buy or sell a stock at a predetermined price in the future, but you don’t have to buy or sell if you choose not to.
Whereas stocks represent an actual portion of ownership in a company, stock options are contracts with other investors that allow you to bet on where you think the price of a stock will go. So instead of paying the price of the stock, you pay a premium. This means you don’t need as much money to start because you can buy an option contract that controls 100 shares for as low as a few dollars.
For example, say you buy an option contract for Amazon at $10 a share. If the price rises to $15, you can now buy 100 shares of Amazon but for the earlier price. This means if you sell them, you can make a $500 profit. On the flip side, if the price falls to $1, you only lose your premium. Sounds pretty great, right?
However, a lot can go wrong if you don’t know what you’re doing, so make sure you know what you’re getting into!
The author says options trading can be compared to betting on horses. You wager on a horse you think will win, and if he does, you get money. If he doesn’t, you lose. But there is one difference: you can place a bet partway through when you have a better idea of where things are going. To practice, try the Test Trading Strategy. Virtual trading tools use fake money in order to practice selling and buying options and stocks. The Test Trading Strategy is using these virtual trading tools as a beneficial, risk-free way to practice trading. To start, you’ll need to make a test trading account. Most brokers have it. Once it’s running, build a Watch List. Your Watch List contains a list of stocks that you monitor on a day-to-day basis. You should add SPY, QQQ, the Dow Jones Industrial Average, and the S&P 500 to…
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Get the complete summary in the appStock option trading is a very lucrative business as long as you know how to keep the risk at a minimum.
Discover which stocks will be the most profitable by using the Test Trading Strategy.
You can keep risks at a minimum by employing techniques such as the Five-Minute Rule
"Make Money Trading Options" is a strong fit if you want practical ideas around economics, investing, management—especially themes like stock option trading is a very lucrative business as long as you know how to keep the risk at a minimum; discover which stocks will be the most profitable by using the test trading strategy. The MinuteRead summary distills these concepts into a focused read, whether you're deciding whether to buy the book or applying its lessons at work.
Michael Sincere (www.michaelsincere) is a MarketWatch columnist and financial author with more than two decades of experience making complex investing ideas accessible to everyday readers. He has written 10 books on investing and personal finance, including two McGraw-Hill bestsellers—"Understanding Stocks" and "Understanding Options"—each of which has sold more than 100,000 copies and been translated into 13 languages. His other titles include "Help Your Child Build Wealth" (Wiley) and "How to…
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