What Is Options Trading? - Explained in Easy Terms

So you're already asking the question, "What is Options Trading"?

And I'm here to tell you that Options Trading is LIFE CHANGING

And I am going to show you how with real data so you can clearly understand how impactful options trading could be for you and your future.

Let’s pick a company everyone is familiar with like Microsoft.  It is a good company and it stock continues to go up in value. And as you can see from the year chart it is just ready to bust up again.  Just a year ago MSFT (the stock symbol for Microsoft) was trading at $157.41.  As I write this article it is trading at $221.54.  If you had held the stock for a year, you would have $64.13 per share.  That’s a 40.7% gain.  Pretty darn good!

Let’s Look at the Same Trade Set Up Stocks Vs Options

Joe Blow’s Trade

Joe Blow is going to purchase 100 Shares of Microsoft today and he intends to hold them until the Price is up to $275.  He believes this will happen in about 6 months.  His expected trade:

Purchase 100 Shares                                       $221.54

Sell in 6 months when price reaches             $275.00

Joe will realize a gain                                        $  53.46

His % percentage gain                                     24.1%

Sweet Sue’s Trade

First you need to see the Option Chain.  Here is a picture of the options available for September 16, 2021 – 10 months from now.  Sweet Sue is going to buy a CALL option right where the price is now trading.  She will pay $32.73 per share 

Purchase 1 Contract (100 Shares)                    $ 32.73

Sell in 6 months when price reaches $275      $ 48.75           

Sue will realize a gain                                          $ 16.02

Her % percentage gain                                       48.9%

Who Made the Better Trade – Joe Blow or Sweet Sue?

Let’s Compare:                                JOE BLOW                  SWEET SUE

Total Spent to Open Trade              $22,154                          $ 3,273

Profit Upon Closing Trade                $  5,346                          $ 1,602

Now the exciting part - % gained     24.1%                             48.9%

Joe did make more profit in actual dollars, but he had to spend a lot more than Sue.  And his return percentage was half of Sue’s.

If Sue had spent the same $22,154 to open her trade, she would have earned $10,845.

So, congratulations!  You are on your way to being wealthy.  There is a learning curve to understanding how to trade options.  In a month I can get you there and you’ll be on your way to making the kinds returns I do year after year. Now you don't have to ask, "What is options trading?".

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