If you are a new investor, you must be wondering, is options trading safe? In the world of investing, there are a lot of directions in which you can invest your money. The reality is that investing can be intimidating to many people. Tens of thousands of people turn to Google every month to ask if now is a good time to buy stocks. With so much information online, it makes it hard to determine which is the best route to take in the stock market. There are stocks, bonds, commodities, mutual funds, futures, options, and crypto to choose from.
Some investors like to stick with mutual funds since all the management worries are done for a fee. Other investors will invest in stock and bonds with the hopes to capture larger gains. Others will invest in options, which is an excellent way to increase your net worth if done correctly. Options are the most dependable form of the hedge, and this also makes them safer than stocks. The best way to build wealth is to stay invested, but I know it can be challenging. This is why I am here to help you make an investment decision in which you will create income selling options.
Is Options Trading Safe? Take it From the Top
Before you can even begin to dive into learning more about options and their safety; you first have to understand what options are. A call option gives you the right, not the obligation; to buy a stock, and a put option gives you the right to sell the stock. If you believe the market is trending upwards, you would purchase a call option. If you felt the market was trending downwards, you would purchase, and put contracts. You would then sell your contracts to either follow your strategy or minimize a loss. Trading options are best to think of it as the probabilities of future price movement. Day traders buy and sell shares of stocks within the same day.
Day trading is the activity of buying and selling stocks, bonds, options, futures, or commodities with the intent of profiting from price movements in the underlying security within a single trading day. Day traders rely on analyzing the movement of stocks on a chart rather than factors like products, industry, and management. The knowledge aids in knowing when to enter or exit the stock market. It also shows trends, which is helpful because previous days’ trends tend to repeat themselves. The main objective of a day trader is to take advantage of small price movements in highly liquid stocks. The more market volatility, the more favorable the conditions for a day trader.
Ready to Put Your Feet In
Now that we know what options trading is, let’s take a look at the risk behind it. The issue, however, is that not all options carry the same risk. If you are the writer (seller) you have a different risk than if you are the holder (buyer). If you are a call holder and buy a call option, the upside potential is unlimited, and the downside potential is the premium that you spent. You want the price to go up a lot so that you can buy it at a lower price. If you are a put holder and buy a put, the upside potential is the difference between the share prices. You want the price to go down a lot, so you can sell it at a higher price.
If you are a call writer and sell a call, the upside potential is the premium for the option; the downside potential is unlimited. You want the price to stay about the same or even drop a little. So that whoever buys your call doesn’t force you to sell. If you are a put writer, and you sell a put, the upside potential is the premium for the option, The downside potential is the amount the stock is worth. You want the price to stay above the strike price, so the buyer doesn’t force you to sell at a higher price than the stock is worth.
So clearly options involve risk, but a life without risks isn’t a life, it’s just existing. Many options investors fear losing money, but the reality is if you use options strategies; you will reduce your risk. Having a plan can make it or break it for beginner investors. If you don’t use a strategy along with identifying your risk tolerance and practice; you will not consistently make a profit. You need to analyze the past performance of the market for stock prices, volume, and zones. You are in luck, as most investors learn these key elements after trial and error. Or even worse, they have to take several courses to learn options strategies. The MK VIP training program is truly the one-stop shop you’ll have to do to become proficient with options trade.
Summary: Is Options Trading Safe?
Is Options Trading Safe? You have learned that not only are trading options safe, but it’s also a great way to generate income. You now have a clear understanding of what buying options entail and what a day trader does. You also learned that an options strategy is key to your success. Furthermore, you have also discovered that options involve risk, but so do all the other securities; options just happen to be cost-efficient and a smarter investment. My goal has always been to help as many day traders achieve their personal financial goals, whether they are novice traders or experienced traders.
My goal has always been to help as many day traders achieve their personal financial goals, whether they are novice traders or experienced traders. The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. With my program, you can learn how to begin day trading, and you will be profitable for at least 80% if not more of your trades. Estée Lauder once said, “I never dreamed about success. I worked for it”. If you put in the work, I can show you the best strategy to have consistent winning trades.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”