x
Over the next several weeks I will educate you on how to buy or sell options. Learn this technique and you will add significant income to your portfolio over time. It is not a get rich scheme......
The majotity of option traders lose money trading options, the reason are several:
Believe or not, over 75 percent of option traders lose money with each and every trade. To win all you have to do is take the other side of the trade, that means selling Puts and Calls instead of Buying those contracts.
When you sell an option contract, you receive a premium ( money). When you buy an option contract you pay the seller of the contract.
Let's review a simple defination
Stock options provide the right ,but not the obligation, to buy or sell units of 100 shares of stock at a certain price by a certain date. One contract equals 100 shares.
There are only two types of options:
Call Options: Provide the right to buy units of100 shares of stock at a certain price by a certain
date.
Call Options: Increase in value when the price of the underlying stock rises.
Put Options: Provide the right to sell units of 100 shares of stock at a certain price by a certain
date.
Put Options: Increase in value when the price of the underlying stock falls.
Every option contract has a strike price, expiration date set sometime in the future.
Next post I will discuss "covered calls" selling a call on stock you already own or purchase as part of the option contract.
Below is a quick video I found that introduces the concept of trading options.
I will give you example of some trades and reasons to make covered calls.
Stay tuned...
Daniel Iuculano, AAMS CMFC
Accredited Asset Management Specialist
Chartered Mutual Fund Counselor
