The stock niche is certainly one of the very best in terms of accepted procedures to make money.
Inside of the commodity market one very very nice manner by which to create cash is options trading. Simply put i earn 15 t0 20% every month by trading options, more particularly put options.
Generally there will be two different facets to put options trading.
At this time, there is the actual element involving safety on your individual portfolio sometimes referred to as buying insurance for your stock. Then there is the wealth building, monthly cash flow side aka getting paid to own a stock. Let's have a quick glance at each of those.
Buying Insurance with Put Options
Being the owner of the particular put options contract, you've got the "option" to offer the stock at a certain price up until you sell the actual option or perhaps the option expires.
A lot of investors use puts to protect their accounts from big movements to the downside as well as to lock in profits.
For example, let's imagine an investor obtained a stock and it increased in price by about $10 per share. This is a pretty big move.
Now the question you could be wondering is...must you take profits or maybe let it ride? You also must consider that should you choose nothing, your gains can be wiped out in minutes with a bit of not so great. Taking zero action is probably the worst steps you can take in the stock market.
So What do you do in that situation?
You may buy a put option with a strike price which is a number of prices below the current price of the stock. By doing this, it will be possible to sell your stock at this strike price regardless of what happens to the cost of the actual stock. For example, if you acquired the stock at $200 and it went up to $250, you can actually purchase the put at $240. With the $240 put option, regardless of how low the stock goes, you can still sell it at $240! So, if the stock drops to $30 per share, you can STILL sell it at $240, think about that for a second...let it sink in.
Making Monthly Passive Income with Put options
On the other hand of the put options coin is how you can create wealth with options by making residual income month after month.
In order for the stock buyer to cover his stocks by purchasing protective puts, he will need someone prepared to sell those put options to him.
I generate income each and every month by simply selling put options against stocks I'd personally be willing to own and sometimes even against stocks that I never plan to own.
One of the keys if you want to building wealth with put option selling is always to sell puts for stocks you will not mind buying and to also try to look for stocks which are relatively flat with regards to their price goes. Flat stocks are usually stocks that move not more than $3 in a month and possess really low PE ratios.
I've found that I also have a substantial amount of success through stock trading inside the $20 - $30 price range. Anything higher as well as cheaper tends to be too risky if you ask me.
Inside of the commodity market one very very nice manner by which to create cash is options trading. Simply put i earn 15 t0 20% every month by trading options, more particularly put options.
Generally there will be two different facets to put options trading.
At this time, there is the actual element involving safety on your individual portfolio sometimes referred to as buying insurance for your stock. Then there is the wealth building, monthly cash flow side aka getting paid to own a stock. Let's have a quick glance at each of those.
Buying Insurance with Put Options
Being the owner of the particular put options contract, you've got the "option" to offer the stock at a certain price up until you sell the actual option or perhaps the option expires.
A lot of investors use puts to protect their accounts from big movements to the downside as well as to lock in profits.
For example, let's imagine an investor obtained a stock and it increased in price by about $10 per share. This is a pretty big move.
Now the question you could be wondering is...must you take profits or maybe let it ride? You also must consider that should you choose nothing, your gains can be wiped out in minutes with a bit of not so great. Taking zero action is probably the worst steps you can take in the stock market.
So What do you do in that situation?
You may buy a put option with a strike price which is a number of prices below the current price of the stock. By doing this, it will be possible to sell your stock at this strike price regardless of what happens to the cost of the actual stock. For example, if you acquired the stock at $200 and it went up to $250, you can actually purchase the put at $240. With the $240 put option, regardless of how low the stock goes, you can still sell it at $240! So, if the stock drops to $30 per share, you can STILL sell it at $240, think about that for a second...let it sink in.
Making Monthly Passive Income with Put options
On the other hand of the put options coin is how you can create wealth with options by making residual income month after month.
In order for the stock buyer to cover his stocks by purchasing protective puts, he will need someone prepared to sell those put options to him.
I generate income each and every month by simply selling put options against stocks I'd personally be willing to own and sometimes even against stocks that I never plan to own.
One of the keys if you want to building wealth with put option selling is always to sell puts for stocks you will not mind buying and to also try to look for stocks which are relatively flat with regards to their price goes. Flat stocks are usually stocks that move not more than $3 in a month and possess really low PE ratios.
I've found that I also have a substantial amount of success through stock trading inside the $20 - $30 price range. Anything higher as well as cheaper tends to be too risky if you ask me.
About the Author:
Want to find out more about what forex and options trading is, then visit Dale Poyser's website on how to choose the best options trading strategies for your needs.
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