Every day, 40,000,000 options are traded hands across the world on 3,000 companies such as Exxon Mobil, Starbucks and Apple computers. Each option contract is worth 100 shares, with an average value of about $50, making a total of some $200,000,000,000 ( twenty billion dollars). Every day!
That makes options trading the third largest financial fight in the world, right after the currency and stock markets. And you don’t know about it, or how to make money in it? Its not your fault, as it never gets coverage on local news, and is not taught in your local high school or college. Its’ time to get options trading known in our schools and in the public world.
There are two things you need to know about options. 1. What they are. 2. How you can make money.
Options are rights to buy or sell anything at fixed price at some date in the future. In this world of constant change and economic uncertainty, options lock in the price of something–100 tons of flour headed for a famine-torn country, or the price of a share of stock like Genzyme, the company with a potential cure for Alzheimer’s. Options provide security for businesses and institutions like pension funds, and monthly income for traders. Options are the security market for the securities markets.
The second thing to know is that options have a fixed shelf life from one week, or one month, to several years. That means buyers of options must exercise their rights before they expire. So there is the second important thing to know: The people who make the most money in options don’t buy them, they sell them.
- Imagine you owned a house worth a million dollars, and every month someone came and gave you $5,000 for the right to buy that house for
$1,100,000. You would collect a lot of money, would’t you? Until eventually the house was sold for $1,100,000. Better still–what if you didn’t own the house–it was someone else’s–could you still sell the options without having to share the income with the home owner? You could also use the cash you took in and buy at a discount!
So, why should I learn to trade options?
1. You can typically earn in a month what people earn on their money in the bank (1 – 2%) or stock market (0% – 20%) in a year. If you put your money is the bank, you get perhaps 2% interest at the end of the year. That’s a long time to wait, and its not much
But options traders collect their money upfront. You get your 2% now! With good trading methods, you can do it again next month, and the next. More skilled traders can get 4-8% per month without much risk.
2. Options trading gives you the opportunity to make money without owning stock.
If you buy 100 shares of Apple Computer stock, it will cost you about $13,000. But for about $3,000 you can buy a Call option which will behave pretty much the same as a stock. If the price goes up, you can gain profit, dollar for dollar. You can even collect dividends on it to enhance your return. That means you can control perhaps 300 shares of stock for the same investment, giving you leverage and increased returns.
3. Traders who sell options are paid very well for provide a service to others.
Options sellers are like insurance companies. They collect premiums and hold the risk money until it is not longer needed. Sellers are paid by the week, month, quarter or year. Once the week or month is over, the trader keeps the money, just like your healthcare or insurance company. The option seller never needs to own the stock, because he doesn’t have such rights. Instead she has obligations to purchase from or, to deliver stock to, others and provides the insurance others need.
In a typical trade, 100 shares of stock can be protected by a Put if the market goes down, or purchased by a Call if the price goes up. You can accumulate enough profit by selling and then buy stock at a discount. You can be paid very well for providing this service!
So, what’s the risk? First, let’s consider the risk of being a net buyer. You are purchasing an asset that is time-limited and decays in value every day. The time advantage is to the seller of options, not the buyer. The danger to sellers is that they will mismanage the risk associated with trading– having to deliver stock to others at a price higher than the market, or receive stock that is worth less than its market value. Successful traders who sell options usually also buy their own insurance to protect against loss, just as insurance companies employ re-insurance.
Get more for selling options than you have to pay out in insurance, and bingo! there’s your profit.
So savvy options traders sell rather than buy options, and cover potential losses with insurance. Yes, there is an internal market providing insurance options to traders.
INCOME minus INSURANCE = PROFIT
Keep taking in more more than you are giving out, and your account can grow at a clip of 8% or more per month–if you know how, when and where to trade.
At the moment, you can’t learn this in any high school in Hawaii, and there are no college level courses at any of our local universities. Are they preparing students for the real world? Do students have options? Apparently not–until now.
Honolulu Options Traders, LLC is designing educational modules, seminars and online resources so that any person, any age, anytime day or night, can learn the principles, strategies and management of successful options trading. Practice with paper money, and launch off into the new income stream that is flowing by–at $200,000,000,0000 per day.
We offer evening classes, week-long intensives, private mentoring in person or on Skype, and are developing a range of products such as games and social groups to make it easier.
What to do next … You can join for free on Meetup, or attend a free Live Trading event. Then pay for a class and practice on paper with no risk. You have many decades of life ahead to earn big money. Options trading is one of the best opportunities for your future financial needs that you will ever see. You don’t need a license, or a sales team, and there are no employees to manage. You just need a computer and 20 hours of training until you learn the HOT Trading System.
So come and learn the world of options trading, and gain a life-long skill. Your future is waiting for you.
And now you know your options!
View our schedule. Come to a free Introduction to Options Trading or sign up for classes at Meetup, our social media site. Our classes are every Tuesday at Manoa Innovation Center, 2800 Woodlawn Drive in the Manoa Valley near the University of Hawaii main campus.
All rights reserved worldwide. Copyright 2015 Graeme Sharrock and Honolulu Options Traders, LLC
Member since 2015
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