rading options is something which is considered very risky by most people. Yes, it can certainly be risky, especially for someone who does not know much about it. This is why research is important if you wish to invest money in such a way. Even though options are considered risky, they also come with advantages. Compared to stock trading, it is more profitable.
As long as you do not get too greedy, you will be in good hands, provided that you have the right strategies for trading. Keep in mind that crash and burn is inevitable if you let your greed lead you, regardless of the type of investment you have. Here are some surefire strategies which will help you make extra money in options.
Adapt a good options trading strategy
Image attributed to Wikimedia SSZ
Selling naked puts
A strategy which every trader should know that can reduce risks and maximize profits is selling naked puts. However, this is a strategy which only works with a market which is trending upward. The great thing about it is that it enables you to get profits upfront, just like credit spreads.
Selling credit spreads
Another options trading strategy which everyone must know you have the chance to grow your portfolio by at least 10% each months if you sell credit spreads. There is not a lot of analysis needed for this strategy. As long as you know how to analyze trends in the stock market, you will be able to profit from this. This profitable strategy is indeed the simplest, quickest and the best and a lot of people have made money with it.
Selling covered calls
Owning a stock and selling covered calls on that stock each month will help you reduce costs. This strategy will help prevent you from getting too attached to your stock and allow you to move to the next one immediately.
Buying and selling deep in the money options
This strategy can help you buy stocks at half the price, thereby allowing you to double your profit. Most of you will not be concerned with dividends and other factors which are related to buying and holding stocks. You will still continue to benefit from it because your price will be matched by the price movement of the stock.
Aside from the four strategies mentioned above, there are more strategies in options trading so start using your computer to your advantage and benefits by reading about them and learning as much as you can. Options are low risk, however, they are expensive and brokers sometime charge a lot of money.
Trading options is not a children’s game but it is also not rocket science. It does not take a genius to be able to sell options and profit from it. Although there are 90% of people who invest in options often and up on the losing side, you should not be discouraged. With the right information and attitude, it could be your ticket to finally making a substantial amount of money and winning.