Before I we delve into options strategies, I would like to talk a little about what this blog is all about. I started this site to try to show how regular people can make money by learning how to use stock options. Even if you never traded stocks or options before, you can easily learn. It might even be better if you never have traded stocks or options before, because you will have a clean slate, and can learn the RIGHT way, from the very beginning.
You don’t need to have a degree or any special training to begin to trade options. You don’t have to be a mathematical genius either. Anybody can do it.
Stock Options Are Easy To Understand
Chances are, if you are reading this, you have heard of stock options. You may or may not know how they work, or how they relate to stock. That’s OK, I’m going to start at the beginning, starting with what are stocks and how to buy and sell them.
I will explain what stocks are, how to open an account, and how to buy and sell stocks as a retail investor, giving real life examples of trades that I make with real money.
The examples I give will be from my account at tastyworks. You can make the same trades with a different broker, but to be honest I strongly recommend tastyworks, because they have the lowest fees, but I will get more into that later.
Options Give You – Well, Options
There are many reasons why people trade options. They could be for income, protection, or to leverage an existing stock position.
Personally I use options strategies to provide income, and to efficiently use my capital. What I mean by that is that I like to use easy option strategies that are easy to understand and do not take a lot of money to place. In fact, most of my trades that I will share with you will require less than $500 of capital, and will provide a 25% to 50% return.
“Options give you options.”
Options Help You Limit Your Risk
The different options strategies that I use all have one thing in common – they are limited risk trades. You will know exactly what your maximum loss is when you use these type of trades. And even if the trades don’t go your way, you will learn how to minimize the risk, so you don’t lose 100%, and sometimes can even turn the loss into a gain.
Trading Stock Options involve risks and are not suitable for every investor. Option trading is speculative in nature and carries a risk of loss. Only invest with money that you can afford to lose.
You Can Risk a Little and Make A Lot
Often the stock option contracts are referred to as being part of securities known as derivatives. All that means is that the price of the option is dependent on the price of the underlying equity. The price of the stock option is derived from the stock.
There are Powerful, but Simple Option Strategies
Once we cover what stock options are and how they work, I hope to explain how simple options strategies can be used to make money when a stock goes up, goes down, or stays withing a certain range. Once you learn some of the basics, you may be surprised at how powerful they can be.
Don’t think you need to be some math whiz or financial guru to make money selling stock options, because you certainly don’t. You will need to know how to do some basic arithmetic though, and a little multiplication and division helps.
Easy to Learn Option Strategies
From time to time I will include a video that will help make understanding option strategies a little easier. This is an example of how the inventors of the tastyworks brokerage publish useful content that helps you learn how to trade stock options.
See Real Stock Option Trades
All of the examples of real trades that I will share will include actual screen shots from my tastyworks account. You will be able to see how powerful a tool that tastyworks is.
I strongly suggest you use tastyworks as your brokerage no matter what type of investment account you are going to be investing in. They have individual, margin, IRA, Roth IRA, and other accounts available.