"Let Me Explain Option Trading in Simple Terms You can Understand"

How to make money with options trading...

I will explain option trading in really simple terms so you can see why trading stock options is so profitable.

This is the first of many lessons in this course that will teach you how to trade stock options through a simple 7-step process.

• You'll learn what I used to turn $600 into roughly $3,000 in a few days...
• You'll see how you can have a large profit even if the stock only moves in price by 1%...
• And when you finish this lesson you'll have a complete understanding on how to make money with options trading...

How to Retire on Less than a Million Dollars...

This is Lesson 1 of Module 1. The Table of Contents is at the bottom of each lesson in this course.

Explain Option Trading

The Concept of Buying and Selling Contracts

If you're frustrated with the technical and over-complicated online options trading tutorials, then you will enjoy the simple and easy to understand lessons on this site.

If anyone understands your frustrations, it's me. I never found anyone to explain option trading in simple terms. I met a bunch of people who tried to explain stock options, but their explanations were way over my head.

I eventually pieced together my own definition and that's what I'm sharing with you today.

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For the purposes of this lesson, I will only be referring to trading stock options, even though options can be traded on other securities such as commodities.

A stock option is not a physical thing like owning shares in a company. Instead, it's a contract between two parties.

When you own stock (or shares), you actually own a piece of the company. When the company's value goes up so does your shares price and then you have the opportunity to sell your stock shares at a higher price.

However, a stock option is an agreement, or a contract, where one party agrees to deliver something (stock shares) to another party within a specific time period and for a specific price.

So trading stock options is essentially the business of buying and selling contracts (stock option contracts).

• "Real estate investors" buy and sell homes
• "Stock Traders" buy and sell shares of stock
• "Option traders" buy and sell contracts

Contract: an agreement made between two or more parties.

It is no different than the contract you sign to buy a house or a contract you have with a lawyer or musician. It's just a contract.

• How option traders make their money is the same way stock traders make their money.

  Stock traders make their money when the asset they bought (stock shares) goes up in price. Once that happens they sell their shares for a profit.

• Options traders make their money when the asset they bought (options contract) goes up in price. They then sell their contract at a higher price then what they paid.

**NOTE**: I am only referring to the buying side of options trading. There is a way to make money by purely selling stock options, but I'll cover that later.

If things are still fuzzy no worries, I'll explain option trading some more.

To gain a better understanding of how contracts can be traded for money, let's move on to an example of how you make money buying and selling contracts.

Proceed to the Trading Stock Options Lesson

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