Why should you learn how to trade stock options?
The options trading example in the video below will answer that for you and you'll also see how traders are using options to accelerate their wealth building efforts...
And when you watch the video please keep in mind that these are the "real" and actual returns that were made...
Before we move into our example, I am making the assumption that you have already read lessons 1 and 2 of this module (the table of contents is at the bottom of this page).
Let's pretend for a moment that you do research and feel that IBM stock will go up in price in a few months, but you don't want to put all your hard earned money at risk yet.
Buying 100 shares would cost you $9,000 (100 shares * $90).
You want to test the waters to see if your theory will pan out. In order to do this you "buy" an options contract that gives you the "right to buy 100 shares of IBM stock for $90".
This contract costs you $680 and compared to $9,000, $680 isn't a lot of money to risk.
You paid $680 for the right to buy IBM at $90. Six months later, IBM is trading at $130 dollars. So essentially you could exercise your contract, buy IBM for $90 and then immediately sell it for $130.
Of course, like in the land example in lesson 1, you could sell your contract to someone else for let's say $1,080. In doing so, you would make a profit of $400 or 59% return on your money.
***Here's the lesson: Trading stock options is where you invest a relatively small sum of money to buy a "contract" that controls something larger.
Your research tells you that your contract will increase in value before a certain date. When it does increase in value, you're going to sell the contract for a higher price than you paid for it and pocket the difference.
Don't worry if you don't fully understand this example. It doesn't stop here. I'll continue to explain option trading as the tutorial progresses along.
As a matter of fact, this entire site and web based home study course was designed to explain options trading in great detail.
There is no way I can fit everything onto this page or on this site for that matter. This is part of the reason why I created a newsletter so I could just "show you" what I do.
Seeing how to trade in real time really helps with the learning process.
To learn more go to this page.