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

How to make money with options trading...

In this lesson I will explain option trading so you can see why some people consistently double their money and others don't. This is Lesson 1 of Module 1 (the table of contents and video lessons are at the bottom of each lesson in this course).

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 moves only 1% in price...

And when you finish this module you'll have a complete understanding of how to make money with options trading...


Explain Option Trading - The Concept of Buying and Selling Contracts for a Profit

If you're frustrated with the technical and over-complicated online options trading tutorials, then I understand your frustrations.

I never found anyone to explain option trading in simple terms so 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 cover that in my more advanced options training.

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.

 

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Proceed to the next lesson or join our community and learn the secret wealth formula that allows you to retire on less than a million dollars.





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