Options Trading Strategy, A Perfect Business

Buying and selling options, shares, and futures is seen in many ways by different people. Some see it at as a form of gambling, not much better than throwing coins down a slot machine. Others view traders as magical people that make money out of thin air. It is true that some people gamble on the market, and that a few traders can be very lucky making money on the market without much of a plan or options trading strategy. However these traders are not the successful ones, not in the long run anyway.

Playing with the stock market can be very risky. Too many people have jumped into this dangerous business finding too late that they did not know what they were getting involved in. Overnight a stock that seemed solid can melt warm butter in your hands. A strong economy can lose its bottom due to a terrorist attack. Amateur traders are cannon fodder for changing trends and a volatile market.

However, trading can be made much safer, as risky as any other business but with much higher profits if you understand how to use the market to your advantage and hedge your risk to manageable levels.

How this is done might seem like a mystery to you. Granted, you are not going to understand it all in five minutes, it will take time and practice to make perfect, but learn you can and much faster than you think. Let us illustrate how a simple options trading strategy can help you protect your investment. Let us say your analysis tells you that a certain company will do great in the next quarter, potentially doubling the price of their stock. So you buy a ton of stocks and wait for the money to roll in. Unfortunately the company goes bust and you are left with nothing.

All of this could have been avoided if you had purchased a selling option, also called a put call, for the same stock. You would not have become an overnight millionaire but at least you would have covered your losses when the stocks of your company dropped.

So if you are tired of losing money on options trading and the only one benefiting from your trading is your broker and his high fees you need a system that will work for you. Finding such a that strategy is not easy. Traders will spend whole lifetimes finding a system that works for them and are continually refining it to their personal perception of risk and circumstances.

How can you learn these strategies and techniques? By talking to a professional trader that has proven himself for over 20 years of experience. Unfortunately not many successful traders are willing to sit down and spend hours talking about their trading secrets.

That is why these videos on offer, are a great deal. Listen as many times as you need to the quality information a professional trader has prepared for you. Over twenty years condensed in a simple but very informative course. Why has he spent hours and house spelling out the options trading strategy that really makes money? To make money of course and because he wants to see you succeed just as he has. You see, in Options Trading others making money is not a problem, everyone can make a profit.

Searching for a brief view into the world of options trading strategy ? We’ve got the super inside skinny on the best options strategies .

Options Trading Strategy, Making A Solid Business Out Of Trading

Buying and selling options, shares, and futures is seen in many ways by different people. Some see it at as a form of gambling, not much better than throwing coins down a slot machine. Others view traders as magical people that make money out of thin air. It is true that some people gamble on the market, and that a few traders can be very lucky making money on the market without much of a plan or options trading strategy. However these traders are not the successful ones, not in the long run anyway.

Playing with the stock market can be very risky. Too many people have jumped into this dangerous business finding too late that they did not know what they were getting involved in. Overnight a stock that seemed solid can melt warm butter in your hands. A strong economy can lose its bottom due to a terrorist attack. Amateur traders are cannon fodder for changing trends and a volatile market.

However, trading can be made much safer, as risky as any other business but with much higher profits if you understand how to use the market to your advantage and hedge your risk to manageable levels.

This does not have to be the case. Trading with stocks and options can be worked as a business, without having to gamble or hope for the best. When you understand how the market works, the function of options and how to use them wisely to manage risk everything starts to make sense.

All of this could have been avoided if you had purchased a selling option, also called a put call, for the same stock. You would not have become an overnight millionaire but at least you would have covered your losses when the stocks of your company dropped.

Only a few traders, the best of the best, make money consistently no matter what mood the market is in. Learning from them is the way to go if you want to succeed and good options trading strategy is your ticket. The problem is where to find a reliable source for such valuable information. The second issue is will you be willing to invest your hard earned money in a great opportunity if you see one.

A great option is to talk to a successful trader and ask him all his secrets, strategies and techniques. Unfortunately most successful traders are too busy making money or spending it to put aside the time. That is why you should look into this full options trading strategy course.

That is why these videos on offer, are a great deal. Listen as many times as you need to the quality information a professional trader has prepared for you. Over twenty years condensed in a simple but very informative course. Why has he spent hours and house spelling out the options trading strategy that really makes money? To make money of course and because he wants to see you succeed just as he has. You see, in Options Trading others making money is not a problem, everyone can make a profit.

Searching for a quick view into the world of options trading strategy ? We have got the super inside skinny on the best options strategies .

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Put Options Used In The Collar Strategy Can Protect Your Stocks

In a bull market there’s a good chance that a stock that you have picked, using some selection process, will increase in value. This is what the average stock picker does, they buy stocks then hope (and often pray) that they go up.

Statistics show that in a bull market about 75% of the stocks will follow the general trend and go up, and in a bear market 75% will also go down. Trading with the trend is the best way to trade as 9 out of 12 stocks will follow the trend and give you the best chance of making gains on your stock purchases.

But what if you own some good stocks and don’t want to sell when the market is clearly going down, or about to go down?. There are a couple of tactics that you can consider, both of which involve the use of options, CALL options and PUT options. There is the widely known strategy called Covered Calls, and the much lesser known one called the Married Put.

Option trading can be very confusing and difficult at 1st, actually it’s not that complicated once you have had a good education in the subject. However if terms like Put and Call Option, Married Put and Covered Call don’t mean anything to you, don’t attempt to trade options until you get that essential education in the theory.

Call options are bought and sold in 100 share blocks, this is 1 option contract. When doing a covered call you sell 1 call option contract for every 100 shares that you own. The value of the call option will go down if the stock goes down, giving you the chance to either let it expire worthless or buy it back at a much cheaper price. Either way you can get about 4-6% downside protection, but if the stock decreases more than this then you will have to take a loss.

The big problem with the covered call strategy is that it only provides very limited downside protection and if the stock takes a big cut like 25%, which can happen, you lose big time and only recover about 3-5% of the loss.

There is a much better way to protect stocks in a bear market than using covered calls, it is called the Married Put. Instead of selling a low credit call option we buy a Put option which can provide a large amount of downside protection. The Put can rapidly increase it’s value as the stock goes down, by how much depends on how carefully the Put option has been selected. The Put is matched to the stock like a good marriage for the best results.

There are a number of parameters that need to be considered when creating a Married Put for protection, the following list highlights the main points:

1. What strike price is selected for the Put option

2. The price of the stock

3. Choice of options, in or out of the money

4. Time to expiration of the Puts

The last point is very important because the Put options that you buy only have a limited life and you need to consider for how long you need the protection. The big advantage of the Married Put strategy over the Covered Call strategy is that if selected correctly it can provide 90-95% loss protection in the event of a large drop in the stock price.

The cost of the PUT is a disadvantage of this strategy if you take a shortsighted approach. There are ways of offsetting this option cost when this strategy is taken to the next level. When traded correctly, with the right stock, the expense of the Put can be offset and good returns can be made when others are loosing their shirts.

The general idea of the Collar Trade is to combine the covered call and married Put strategy into one, this is what is called the Collar Trade. In effect you put a collar around the stock, sell a call and buy a PUT. If you do this correctly most of the cost of the Put can be offset by the credit from the covered call so you can protect your valuable stock at almost no cost. Yes this is a great strategy which the general public is unfortunately very ignorant of, and most brokers don’t understand.

James J. Dehoiver is an expert stock trader, he also loves to learn stock trading systems and master the best technical indicators for stock traders.

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