How to Trade Stock Options

With options, you can make money in an up and down market. I think options are better then stocks, because you can buy shares cheap. The most exciting thing about options, are the returns you can get just in a couple of months. It's possible to get 50% return or more, just within a month. If you keep your money in a mutual fund, then your lucky to even get 11% a year. You can even purchase options cheaper then mutual funds. The average investor, doesn't have the money to invest like warren buffet. That's why I recommend buying options. If you buy options, then you can control more shares without owning them. You can even rent your stock and receive passive income. Here's some basic tips on trading stock options.

Instructions

1. There are really two type of options a call option and a put option. If you study these two options, then you'll be on your way to trading stock options.

2. call options- A call options is a type of option to use when a stock is going up. If your stock is going down and you use a call option, then you'll lose money. You can only use a call option in a up market.

3. put option- When you see a stock go down, then you can make money using put options. If your stock goes up and you use a put option, then you'll lose money. With this recession option traders are making a killing in the stock market. There are opportunities to make money, using put options.

4. covered calls- With these type of options you can receive passive income. You have to purchase a stock first, then when you buy the stock you have to buy a covered call option. When you have a covered call on your stock, then it aloud you to rent your stock to investors. Selling covered calls is like renting out a house, but instead your renting a stock.

5. shorting stocks- Shorting a stock is just like using a put option. When the stock is going down you want to short it. You can make more money shorting stocks, then using put options. If your a more experienced investor, then you might like the idea of shorting stocks.

Tips & Warnings

• start now!

• paper trade first.