How to Make Money Quick in the Stock Market
To paraphrase the old saw, "If you were guaranteed to make a quick buck in the stock market, everyone would be doing it." Conventional wisdom suggests that buying and holding stock for the long haul is the best way to make money. However, if you are a gambler and are willing to take a chance on making a short-term killing in the stock market, there are some ways to invest that can make serious money quickly.
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Buy stock options. They are extremely risky if you do not have a solid understanding of the stock market, but they can be extremely profitable because they provide you greater leverage than if you were to simply buy stock. When you buy an option, you are buying the right to either buy (call) or sell (put) 100 shares of a company's stock by a certain date. Let's say you pay $200 for a call option that can be exercised anytime during the next three months that will allow you to buy 100 shares of ABC Company at its current price, $50 per share. If the stock goes to $75.00 per share within the three-month period, and you exercise the option, you will make $2,500 (100 x $25) for an investment of $200. Had you bought the stock, when you sell it you will make a profit of 50%, far less than if you would have invested in the option. And you would risk only $200 instead of $5,000.
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Buy so-called penny stocks. As the name implies, many of these stocks sell for less than $1 per share. Often, they are issued on the strength of an untested idea, so there is little to back up their purchase. But because of their small price, a rise of a few cents can make the investor a lot of money very quickly.
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Buy Initial Public Offerings (IPO). Typically, a company may be started with private investment. Before long, it is considered to be a very profitable venture but will need additional capital to grow. So it will make the decision to issue stock by having a brokerage company conduct an IPO. Very often, the company will insist that a certain number of shares be sold, so the brokerage company will offer the stock at a very attractive price. Once it is purchased by investors, its price can rise in a short time. For instance, search engine Google had an IPO of its stock and the price was up by 17% during its first day of trading.
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Carve out the time that is required to succeed with any of these investments, and be prepared to suffer a major loss with any of these three strategies. Although some investors have made a lot of money trading in options, IPOs and penny stocks, many have lost all their investment because they did not take the time necessary to understand those markets.
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