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

You're About to Discover the Retirement Blueprint...

That allowed a minority, growing up poor
in a house with no bathroom
and no running water,
to retire in style at the age of 34!

(P.S. Our household toilet was a 5-gallon paint bucket.)

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.

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

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 this tutorial only covers buying options.

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

The next lesson (trading stock options) will give you example of how you make money buying and selling contracts. That will help you gain a better understanding of how contracts can be traded for money.

Products Created by Trader Travis

Options Trading Made Simple Book

Options Trading Made Simple Course

Marketclub Options (offered via Marketclub)

Free Options Course Learning Modules

Module 1: Option Basics

Module 2: Option Value

Module 3: Basic Strategies

Module 4: Stock Charts

Module 5: Technical Indicators

Module 6: The 7-step process I use to trade stock options

Return to Learn Stock Options Trading Home Page

Or Proceed to Trader Travis's YouTube Channel