Now, is there a proven, legit way to profit from Options trading? Especially useful for U. Trading mentor Adam Khoo understands that Options can be complex and intimidating for traders.
Option buyers are charged an amount called a "premium" by the sellers for such a right. In contrast, option sellers option writers assume greater risk than the options trading lesson buyers, which is why they demand this premium.
Options are divided into "call" and "put" options.
There are some advantages to trading options. The following are basic option strategies for beginners. Potential profit is unlimited, as the option payoff will increase along with the underlying asset price until expiration, and there is theoretically no limit to how high it can go.
With a put option, if the underlying rises past the option's strike price, the option will simply expire worthlessly.
In exchange for this risk, a covered call strategy provides limited downside protection in the form of premium received when selling the call option.
A protective put is a long put, like the strategy we discussed above; however, the goal, as the name implies, is downside protection versus attempting to profit from a options trading lesson move.
If a trader owns shares that he or she is bullish on in the long run but wants to protect against a decline in the short run, they may purchase a protective put.
I never found anyone to explain option trading in simple terms so I eventually pieced together my own definition and that's what I'm sharing with you today. In this lesson I will explain option trading so you can see why some people consistently double their money and others don't. This is Lesson 1 of Module 1 the table of contents and video lessons are at the bottom of each lesson in this course. And when you finish this module you'll have a complete understanding of how to make money with options trading Explain Option Trading - The Concept of Buying and Selling Contracts for a Profit For the purposes of this lesson, I will only be referring to trading stock options, even though options can be traded on other securities options trading lesson as commodities.
Hence, the position can effectively be thought of as an insurance strategy. The trader can set the strike price below the current price to reduce premium payment at the expense of decreasing downside protection.
This can be thought of as deductible insurance. The following put options are available: June options.