Once they switch to the “Big Money Market” on Wall Street, most people have a difficult time going back to anything else. It’s all because there’s the potential for double, triple, and quadruple-your-money gains in this high-stakes environment.
Believe me, when you hit it correctly in this space, it feels like your money just duplicates.
Let me tell you what this market is, how it works, and what you could do to turn it into your own personal ATM machine…
A great gain when you’re trading regular old stocks is maybe double digits, right? Depending on the situation, a 15 or 20% return would be phenomenal in most cases.
But those are almost pitiful gains when you’re dealing with the options market!
Anytime I place an option trade, I’m going for at least 50% gains, and that’s not unrealistic at all when you know what to trade and WHEN.
If you don’t know, “an option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties,” according to Investopedia.com.
There are really 2 types of options and 4 ways to trade:
- Buy a CALL option
- Sell a CALL option
- Buy a PUT option
- Sell a PUT option
Right now I’ll just focus on buying for simplicities sake.
When you buy a call option, you are really buying a time frame for which you expect the underlying security (which can be a stock, ETF, etc.) to be priced above at the expiration of the call option.
So if you think AAPL, which is at $100, will be above $110 by December, you could buy a CALL option contract on AAPL saying precisely that. And each contract accounts for 100 shares of the underlying security – that’s why there’s so much money to be made in options!
But this is NOT buying and selling stocks. Options allow you to buy and sell time frames.
Buying a PUT option contract is the exact opposite of buying a CALL option – you now want the price of the underlying security to be below a certain price at the expiration.
Now, turning the options market into your own ATM machine has absolutely everything to do with timing.
The way options prices go, you can hit 2, 3, 4 or more times your money within a day or 2 if you time the trade perfectly!
As someone who trades options, I think everyone should try this big-money market. But first, I strongly recommend doing virtual trades until you’re accustomed to how options trading works.
