The stock market is one of the most popular ways to make money. Inside the stock market a very very lucrative way to build wealth is options trading. I make 15 t0 20% every month by trading options, more specifically put options.There are two attributes to put options trading. There is the aspect of protection on your account aka buying
insurance for your stock, and then there is the wealth building, monthly income side aka getting paid to own a stock. A few have a quick look at both.Buying Insurance with Put Alternatives.As the owner of a the put options contract,
you have the “option” to sell a stock at a certain price up until you sell the possibility or the option expires.
The majority of investors use puts to protect their account from big movements to the disadvantage as well as lock in profits. For example, lets say an investor acquired a stock and it went up in price by about $10 each share. This is a pretty big move.
Right now the question you might be asking is… should you take profits or allow it to ride? Also you have to consider that if you do nothing, your profits could be erased in minutes with some bad news. Taking no action is one of the most severe things you can do in the stock market.
What do you do for the reason that situation?
You can obtain a put option at a strike price which is a few prices below the current price of the stock. By simply doing this, you will be able to sell your stock at that hit price regardless of what happens to the price tag on the actual stock. For example , if you purchased the stock at one hundred dollar and it went up to $250, you could buy the put at $240. With the $240 put option, no matter how low the stock goes, you can still sell it at $240! So, if the stock droplets to $30 per reveal, you can easily still sell it at $240, think about that for a second… allow it sink in.
Generating Monthly Passive Income with Put options
On the other side of the put options coin is the best way to build wealth with options by making passive income every month.
In order for the stock investor to guard his stocks by buying protective puts, he needs to have someone prepared to sell those put options to him.
I actually earn cash every month by selling put options against stocks I would be willing to own or even against stocks that I never plan to own.
The particular key to building riches with put option marketing is to sell puts on stocks you would not mind owning and to also look for stocks that are relatively flat as much as their price goes. Flat stocks are stocks that move no more than $3 in a calendar month and have very low PE ratios.
I find that It is good a lot of success by trading stocks in the 20 dollars – $30 budget range. Something higher or lower tends to be too high-risk in my opinion.
I have recently been investing for over ten years and have done careful research about how to build wealth. My primary concentrate is on strategies that can create low chance residual streams of income.