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...
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).
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.
**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 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