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Is it realistic to get rich on options

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Even worse, some experts make it seem like you need a Ph. Investors keep rating of trading signals eye on Hollande Option myths probably started in when Dutch investors bought call options on exotic tulip bulbs. Some people made paper fortunes without ever taking possession of the beautiful bulbs. When tulip prices collapsed a few years later, so did the Dutch economy, and the once valuable options became worthless.

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Many investors blamed options for their losses. The real risk is with the options trader. Myth 2: Options are difficult to understand Options by themselves are not difficult to understand.

The Truth About Trading Options for Income Most people associate investment success with nailing large returns on a set of individual trades. While you could identify and successfully invest in one single stock or option and make a killing, committing a significant portion of your funds to a single security exposes you not just to high rewards, but also to a significant risk of losing all your money.

Basically, you have the right to buy or sell an underlying stock at a designated price. Even better, there are only two options: a call and a put, and you can either buy or sell.

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Also, the timing is difficult. Options have a limited lifetime, and once they expire, they are worthless, so your stock has to move in your direction quickly.

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If it were that easy to make a profit trading options, then everyone would be rich. They are attempting to turn a small amount of money into a huge windfall.

What are realistic returns for options income trading?

Because the options are out-of-the-money, the time remaining before the options expire becomes critical. The stock must make its move before expiration for them to work in your favor.

I understand the thought process behind the question, but it always disturbs me. It's just the wrong question. It would be better to ask any of these: How much time should I expect to devote to my options education before expecting to earn money? How much cash do I need before opening an options trading account?

On the other hand, selling covered calls reduces risk because you already own the stock. And if the stock tumbles, the covered call owner loses less than the stockholder.

Pin1 3 Shares Options are a financial instrument that you can use for a number of different purposes: as protection against expected moves in an underlying instrument such as a stock; as a way to use leverage to control more of a stock than you want to buy outright; as a way to use your existing investments to earn additional cash; and many other uses. But, can you get rich trading options? Since an option contract represents shares of the underlying stock, you can profit from controlling a lot more shares of your favorite growth stock than you would if you were to purchase individual shares with the same amount of cash. When your chosen stock flies to the moon, sell your options for a massive profit.

After all, another myth is that someone has a secret. The only secret to making profits in the options market is hard work, discipline, having a plan, and learning how to accurately price options.

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Michael Sincere www.