July 1, 2015
Option Leverage Makes Trades Affordable
- The leverage: Controlling large assets with a small amount of money.
- Flexibility: Being able to make money in any type of market – bull, bear, neutral
- Risk Selection: Be in control of the amount of risk you take on any investment play.
- Protection: Having economical ways of protecting money you have already made.
LEVERAGEApple shares are trading near $130 a share; that’s about $13,000 to buy 100 shares. A CALL option for about 90 days at-the-money cost only about $650. That’s a leverage of about 20-to-1. The ATM (at-the-money) CALL has a delta of about .50, so two of these options would capture the same upside movement as 100 shares – at a cost of $1,300, only 1/10-th the cost of buying the shares.All of the above are great, but the thing I enjoy most about option trading is that I can open my office anywhere I can get an internet connection. My second favorite thing about trading options is the strategy of selling them. About 80% of options expire worthless; this means the odds are in my favor from the very start of these trades. As you read more about how this works, you will realize you can make money selling options even when your market view is wrong. You will learn how to use your online trading platform to measure the risk of each of these trades and to calculate the probability of profit of each and every trade. I didn’t say it was easy and I didn’t say you will always make money, but the smarter you learn to trade – the luckier you’ll get!
from: Options Exposed – The Most Popular & Profitable Option Trades of All Time The new 2015-2016 Edition 192-page paperback with over 30 diagrams of option strategies.