stock option

Jan

2021

Why I Stopped Investing in Stocks

Reading Time: 3 minutes

When I first got into the stock market I was always looking for the blue chip stock or the undervalued stock with the dream of thinking one day it will make me rich. After 2 years of getting 10%-15% returns; I realized it would take me many years to achieve my dreams. When I found Stock Options and a system that works with it, that’s when all my dreams of being financially free finally came true. In fact, if you asked me to buy shares on the stock market, it would feel like watching grass grow. That’s why I stopped investing in stocks.

Here’s 5 Reasons Why I Never Touch Stocks Anymore:

1. The Multiplier Effect

Options are a leveraged tool…when a stock goes up 5% it might make you happy but NOT wealthy unless you have a lot of money invested in that stock. For new investors with only a few thousand dollars, this is not going to make much of a positive impact on their financial situation.

But with Stock Options, a mere 5% increase in the share price can result in a 30%-50% increase in your investment. And if you can do that once or twice a month, the compounding effect over a year can be life-changing.

2. I Can Bet On Any Horse

Imagine going to the races and trying to pick the winning horse. Changes of you betting on the winning horse is very low. But what if you can bet on any horse and still, win?

Stock options investing is similar. if you know how to, you can bet on any ‘horse’ and make money. Whether the market goes up, down or sideways; you can still make money.

Whereas when buying shares, you generally can only make money if the stock goes one way…UP.

3. Protecting My Downside

The #1 greatest fear for every stock investor is that if the market has a big correction or crashes. I, on the other hand, have no such worries.

If the market crashes, my investments are well protected. Many times, I’ve made the most money when there’s a sudden huge market dip. That’s the beauty of using stock options rather than buying the actual stock.

4. Time Can be My Friend

For stock investors, if a stock goes sideways for a long period of time; they end up making no money or lose out on other investment opportunities. But for me, sideway stocks can be great. Every month I can make a good sum of money as the stock goes sideways.

That’s another benefit of using Options.

5. A Great Tool to Compliment Your Investment in Shares

Ok, so maybe you want to stick to investing in regular shares.

Options are actually a fantastic tool to compliment your investments in shares and help you get better returns.

Here’s just a few examples:

You can buy shares at a ‘discount’ to the current market price, usually at a 2% to 5% discount.
You can get ‘rent’ from your shares every single month of around 2%-5% of the value of your shares.
Protect your stock’s value. Imagine that for a small price, you can ‘lock-in’ the profits of your stock and not worry about waking up to a market crash…and still profit if the stock goes up further

But a word of caution…Options, like any leveraged tool, is like a double-edged sword. It can help you cut things but you can also cut yourself.

While Investing in Options can help you get incredible gains. There are many dangers:

Many people end up losing all their investment capital
Many people take risks that professionals would never make
You need a good system to invest otherwise you will be constantly stressed.
Time can be your enemy…the value of your Option can erode very quickly and be worthless.

That’s why you need proper education and a system that works…

PS. Warning! Once you discover the power of Options investing, you may not ever want to invest in anything else ever again.

Interested in knowing more about stock options trading? Register for a free webinar now.

Mirriam MacWilliams is a recipient of the “World’s Leading Trading Couch and Trainer” by Brand Laureate. She is the former National Director of Education of the largest investment club in the US.

A corporate high-flyer at the peak of her career, Miriam gave up a jet-setting job as the former Vice-President of Investor Relations of a large bottling company outside of the US, and a six-figure annual salary for a little known and predominantly male-dominated world of stock options trading.

Feature Image by Burak K from Pexels

Dec

2020

Can Stock Options Trading Make You Rich?

Reading Time: 2 minutes

If you know what you are doing, yes, stock options trading can make you rich.

But if you are thinking that it is some form of a get rich quick scheme, then you are wrong. Sorry to disappoint you but there is no such thing.

Don’t fall for get rich quick schemes. It takes time and effort to build wealth properly.
– Dave Ramsey

Like any other investment vehicles, stock options trading carries its own degree of risk. When you invest in something, you are always exposing yourself to the uncertainty of the situation. There is always a chance that the result will not turn out to be the way you expect them to be. In fact, if you are not careful, you might end up losing a lot of money trading options.

The good news is that there is actually a way to minimize risk. But first, you must get rid of the get rich quick mindset. Success and wealth does not happen overnight. It takes a lot of time and effort. Once you realized this, then you are now ready to make your investment.

However, going into trading without knowledge is akin to gambling. It is no longer investing.

Without wisdom, gold is quickly lost by those who have it, but with wisdom, gold can be secured by those who have it not.
– George S. Clason

Financial literacy is always the first step in achieving your financial goals. Since stock options trading requires technical knowledge, it helps to have mentors that can teach you about stock options, especially for beginners.

Mentors are people who are experts in that particular field. Stock option trading mentors are seasoned traders. They have deep understanding, knowledge, skills and expertise on the trade. They don’t just make predictions. because they have used proven and tested strategies for years. Moreover, they read company profiles and financial statements, analyze data and study chart patterns. They use algorithmic trading programs and fundamental analysis. Then, they come up with sound and efficient strategies using the knowledge and information that they have.

Yes, you can read and study about stock options trading on your own. But having the guidance of mentors can make your journey towards wealth easier and faster.

Good luck!

Interested in knowing more about stock options trading? Register for a free webinar now.

Feature Image from Pixabay Images.

Nov

2020

Stocks or Stock Options: Which is Better For You?

Reading Time: 4 minutes

One lesson that this pandemic taught us is that we should always have money set aside for future use. However, parking your money in a regular savings account is never a good idea because of inflation. Warren Buffet, one of the world’s most successful investors of our time has this to say about investing in cash:

The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time… Cash is a bad investment over time.”
– Warren Buffet

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Thus, it is always better to invest your money. But, there are so many investment vehicles available out there. How to know which one is best for you? If you want to stay liquid and are willing to take a little risk to get higher returns; then, you can try investing in stocks or stock options.

Stocks

A stock means a share in a company. As part-owner of a company, you get a claim on the company’s assets and earnings. You cannot make decisions on the management of the company though. As a common shareholder, you do however have the right to vote on major issues such as changes in charter or board of directors during shareholder’s meetings.

How to Profit in Stocks?

There are two possible ways to earn money from stock ownership. First, you can get a share of the company’s earnings through dividends. Second, if you need the money in the future, you can always sell your stocks and earn from price appreciation. Just like in real estate, art works, jewelries and other assets; there is always a possibility of an increase in the value of your stocks over a period of time.

Why Buy Stocks?

Owning a business entails a lot of work especially if you build your business from scratch. You need to oversee not just the day-to-day operations but also other aspects like marketing, human resource and financial management. You may be your own boss but you have a lot of responsibilities. You need to make tough decisions and sometimes work long hours.

Investing in stocks is just like owning a business. The only difference is that you don’t need to go to work at all. You can just sit back, relax, wait for your pay check and let the likes of Bill Gates, Jack Ma, Warren Buffet or Jeff Bezos take care of your money. These business tycoons will be the ones to manage the day-to-day operations of the business while you just wait for your income. Now, how cool is that?!

Furthermore, stock investing is ideal for beginners. There is a way to become a passive investor. The easiest way to invest is through Cost-Averaging. It simply means buying stocks for a set amount each month over a long period of time. There is no need to carefully watch the market.

Stock Options

Stock options are different from stocks. With options, you don’t actually become shareholders of a company. Instead, what you have are contracts. Options are contracts that give the holder the right, but not the obligation, to buy and sell stocks at a predetermined date and price.

How to Profit from Options?

There are two kinds of options: the call and the put. The call option is a contract with the right to buy while the put option is a contract with the right to sell shares at a predetermined date and price. In short, a call option is a good investment if there is an expected increase in future stock prices. A put option on the other hand, is a good investment if there is an expected decrease in future stock prices. To put it simply, stock options empower the holder to potentially profit from a trade regardless of market direction.

Why Buy Stock Options?

For one, compared to stocks, options are more affordable. You can get options for just a fraction of the price of a stock. For example, as of this writing, an Apple Inc. share cost US$119.49 while a stock option price cost only US$1 per contract and even cheaper.

Second, with options there is a way to earn money even if the market goes down. Options allow investors to use a hedging strategy to lower risk. This means that an investor can buy a call option, a put option or both at the same time if the investor is not sure whether the price of stocks will go up or down in the future. This is different from stocks wherein price appreciation only happens when the market goes up.

And lastly, since options are contracts, there are expiration dates. Contracts can either be weekly, monthly or even longer. This is good for short-term investors. It means there is no need to wait for a couple of months or even years to earn. Higher percentage returns are possible in just a few days.

However, unlike stock investing, stock options investors need proper training first. To earn a higher percentage of returns is not without risks. Thus, it is important that stock options traders know what they are doing.

Join the Free Webinar on Stock Options Trading

Stock or Stock Options: Which is Better for You?

Both stock and stock options are good investment vehicles. To know which one is better for you, it all depends on what kind of investor you are. If you are looking for something long-term then go for stocks. If you are a short-term investor, then stock options trading is for you. If you are a passive investor, meaning you don’t want to be bothered with the management of your investment, then you are better off with stocks. However, if you want to be in control of your investments, then go with stock options.

In short, whichever is better for you is totally up to you. It is a personal choice. It all depends on what you want and what will best suit your financial goals, personal interests and lifestyle.

Happy investing!

Feature Image From Pixabay images

Nov

2020

Stock Options: A Way to Earn Amidst A Crisis

Reading Time: 4 minutes

This pandemic is more than just a health concern. The social and economic impacts are also quite devastating. Many people were laid off from their jobs. Entrepreneurs lost their businesses. Stock market investors watched in horror as the stock market crashed at an unprecedented speed in the global financial market history. During this time of extreme uncertainty, what do you do if you are an investor? The good news is that there is still a way for investors to earn money despite all these uncertainties. And that is through Stock Options. Stock options is a way to earn amidst a crisis.

What are Stock Options?

Stock Options are actually contracts. They are contracts that allow the investor to buy or sell shares of stocks at a predetermined date, at an agreed upon price. Although investors have the right, they are not obligated in any way to buy or sell the shares.

Types of Stock Options

There are two kinds of stock options, the Call Option and the Put Option. While call options give the investor the right to buy a stock, a put option gives the investor the right to sell the stock.

1.Call Option

Think of the call option this way. Let’s say you want to buy a car. You already found the perfect car but you don’t have money to pay the full amount for the car yet. So, what you should do is to give earnest money.

An earnest money is a deposit made to the seller to hold the car in reserve for you for a certain period of time. Because of your agreement with the seller, the seller cannot sell the car to any other person during the period of the contract. You on the other hand were able to buy time to raise the money. The earnest money gave you the leverage to control the sale of the car during the period of the contract. So, even with a price increase, you as the buyer can still purchase the car at the agreed price.

From an investor’s point of view, a call option works in a similar manner. Although you don’t own the stock itself; by owning a contract, you have control of the stocks. What you have is leverage. With one contract, you can control 100 shares of stocks without paying the full value of the stocks.

2. Put Option

The put option on the other hand works like an insurance. Let’s say you bought insurance for your newly-purchased car. You paid a small amount or a premium to have your car insured to cover damages for a fixed amount called the coverage value. If by chance your car gets damaged or stolen, the insurance will then pay for damages amounting to coverage of your insurance. Thus, the insurance served as financial protection. Similarly, if an investor wants to protect his/her portfolio, the investor then buys a put option to protect the stocks from future drop in market prices.

Hedging

Although there are many strategies in trading stock options, hedging is one of the strategies used to lessen the risk of the investment. In finance, to hedge means to offset the chance of a particular investment in losing its value. The Hedge Strategy in Stock Options is a good way to earn money even in a pandemic.

In stock options trading, a trader buys a call option if there is a future expectation of an increase in stock prices in a given time. On the other hand, a trader buys a put option if there is future expectation of a decrease in stock prices at a given time.

If the trader is not sure of whether the stock will go up or down, it is possible to buy both call and put options at the same time as a hedge strategy.

Parts of an Option

Each option contract has the following components:

1. Underlying Asset

Since option is a derivative, meaning something that is based on another thing, all options contracts have an underlying asset. The asset can be a stock, an index or an exchange-traded fund.

2. Size of Contract

Each option contract is equivalent to a certain number of shares. Each stock exchange varies in number as far as contract sizes are concerned. If you are trading in the United States, each option contract is equal to 100 shares per contract.

3. Expiration Date

All options contracts have different expiration dates. The expiration date is the day where the option to buy or sell is supposed to be exercised. There are contracts that are as short as a week while others can last longer than four months. The standard is a monthly contract that typically expires at the third Friday of the month.

4. Strike Price

The strike price is the price where the contract can be bought or sold. In layman’s term, it is similar to a target price.

5. Premium

The premium is the price to be paid by the buyer for a stock options contract. The premium is basically the price of the contract.

With Stock Options trading, you don’t need to worry about the market going down because there is a way to earn a profit regardless of market direction. There is also no need to wait for months or even years to get possible returns because there is a way to earn profits in less than a week’s time.

An investment in knowledge pays the best interest. When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research, study and analysis before making any investment decisions.
– Benjamin Franklin

Whether you are a seasoned investor or a newbie, stock options trading is a good investment alternative especially during difficult economic times. But before you open your trade account and start trading, just know that like any other investment vehicles, stock options trading is not without risk. Thus, it is highly recommended that you read and learn more about stock options trading.

Interested in knowing more about stock options trading? Register for a free webinar now.

Feature Image by Image by Sergei Tokmakov, Esq. from Pixabay