Stock Options Trading: Reasons Why Stock Options Trading Can Make You Money
In today's economy, people everywhere are looking for of income, to shore up or even replace earnings from a job. Here's why stock options trading just might be the ideal income source you need. Just make sure you get a good options trading education!
Options trading gives you massive leverage. It is this leverage that enables the investor to make sizeable returns at a rapid pace. It is precisely this feature which attracts so many savvy investors to options trading in the first place. This factor is also why many wealth and investment advisors recommend it for their clients and readers. With options trading, it is possible to benefit greatly even when you are risking very little of your own cash.
What this means to you is you can expand your portfolio very quickly, and with little downside risk. You can then redirect your earnings and reinvest in more options, or you may decide to move those funds to another type of investment.
As we've seen, leverage gives you the opportunity to profit from the gains of a stock while risking a relatively small portion of your own money. How does this play out in the real world? Stock options can be locked up for a fraction of the market value of the stock itself. Take a popular company like Nintendo (NTDOY), whose call option may be sitting at 1%-2% of the stock trading value. Imagine participating in the appreciation of 100 Nintendo shares of stock when you invest in call options for a miniscule $180 even when the stock investor had to set aside $10,575 to acquire the actual stocks!
This is a hypothetical example, of course, and it illustrates the value of stock options trading.
Options trading gives you massive leverage. It is this leverage that enables the investor to make sizeable returns at a rapid pace. It is precisely this feature which attracts so many savvy investors to options trading in the first place. This factor is also why many wealth and investment advisors recommend it for their clients and readers. With options trading, it is possible to benefit greatly even when you are risking very little of your own cash.
What this means to you is you can expand your portfolio very quickly, and with little downside risk. You can then redirect your earnings and reinvest in more options, or you may decide to move those funds to another type of investment.
As we've seen, leverage gives you the opportunity to profit from the gains of a stock while risking a relatively small portion of your own money. How does this play out in the real world? Stock options can be locked up for a fraction of the market value of the stock itself. Take a popular company like Nintendo (NTDOY), whose call option may be sitting at 1%-2% of the stock trading value. Imagine participating in the appreciation of 100 Nintendo shares of stock when you invest in call options for a miniscule $180 even when the stock investor had to set aside $10,575 to acquire the actual stocks!
This is a hypothetical example, of course, and it illustrates the value of stock options trading.