Get Rich With Options Trading

Options trading is the best thing to do in the stock market right now. Options is a contract that derives its value from the underlying asset like stocks, commodities, currencies, ETFs, bonds and even futures. An options contract gives you the right to buy or sell the underlying asset at a certain price known as the strike price before a certain date known as the exercise date by paying a small price known as premium.

Options can be of two types: 1) Puts and 2) Calls. Calls give you the right to buy the underlying asset whereas puts give you the right to sell the underlying asset at the strike price before the exercise date.

Now options technically speaking are not investments as they have a limited time period before they expire. That time period may extend from a month to a year. LEAPs are Long Term Anticipation Securities and can have a time frame of up to three years. LEAPs are almost like regular options with the only basic difference their long time span. Options are tremendous instruments in the hands of speculators as they provide unlimited upside potential with a limited downside risk.

Now, there is a special type of options contract known as Index Options. Index options are written on stock indexes such as the famous S&P 500, Dow Jones Industrial Average (DJIA), NASDAQ, DAX, FTSE, Hang Seng, CAC and a host of other stock indexes. By trading a stock index options contract, you can trade against the whole stock market instead of a single stock. This gives you a tremendous profit making opportunity if you know how to handle it. Similarly, you can invest in ETF Options instead of ETFs directly. ETFs are written on various stocks indices, market indices, industry indices and sector indices. ETF options provide you with an opportunity to profit from the volatility in these indices. You can even trade futures options instead of trading futures directly. Futures options are for ultra aggressive investors who have a high level of risk appetite. Just a repetition, options are for those savvy investors who understand how to use them. Invest in them wrongly and lose your shirt. Options have an inherent element of time volatility in them. Suppose, you are bullish on Google stock GOOG. You think, Google's next quaterly earnings report will be so good so as to move the market and take GOOG higher than it's present price. You invest in three months GOOG options. The earnings report was good but the market did not notice much as it was expected of Google to give good earning. GOOG price does not move as much as you had expected. You let the options contract expire, losing your investment. So, before investing in options learn something about them especially the Options Greeks!

So, options trading can make you rich but only if you know how to invest in them. Chris Rowe is considered to a master options trader. He was already a millionaire in his 20s when he left the Wall Street. He publised his options trading newsletter, "The Trend Rider." In 2005, he surprised the trading community by not losing even a single options trade in the whole year. Last year in 2009, he had released his course Options GPS. It sold out. I don't know when he will open it again but whenever, he does, just take a look at it. He developed this course in collaboration with Ron Ianieri, another great options trader and educator! Who can explain, complex things in a very simple and easy format.

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