Grow Wealth Online with Put Option Investing
The stock trade is another of the many prevalent techniques to be able to produce money.
Inside the stock industry a very very good means to generate cash and it is options trading. Simply put I earn 15 t0 20% each and every month by trading options, more precisely put options.
Generally there are are two different features to put options investment.
At this time there is the element associated with safeguarding on an individual?s account also known as buying insurance for your stock, and then there is the wealth building, monthly cash flow side aka getting paid to own a stock. Let us have a quick view at each of these.
Buying Insurance with Put Options
To be the buyer of this put options contract, you will have the ?option? to offer a stock set at a certain price until you sell the actual option or perhaps the particular option expires.
Nearly all investors implement puts to protect their account from big movements to the downside and furthermore lock in profits.
For example, lets say an investor purchased a stock and it increased in price by about $10 per share. This is a really large move.
At this point the question you will be asking is?must you take profits or perhaps let it ride? Additionally you need to take into account that if you do nothing, your earnings may be erased within minutes with some not so great news. Taking absolutely no action is probably the worst steps you can take within the stock market. What do you do in that situation?
You can buy a put option with a strike price which is a number of prices below the current price of the stock. Using this method, it is possible to sell your stock at that strike price regardless of what happens to the cost of the actual stock. For example, if you acquired the stock at $200 and it increased to $250, you could purchase the put at $240. With the $240 put option, it doesn?t matter how low the stock goes, you can still sell it at $240! So, if the stock drops to $30 per share, you can STILL sell it at $240, think about that for a second?let it sink in.
Making Monthly Passive Income with Put options
On the other side of the put options coin is how it is possible to build wealth by using options and making residual income each month.
For the stock buyer to protect his stocks by buying protective puts, he will need to have someone prepared to sell those put options to him.
I make cash every month by simply selling put options against stocks I will be ready to own and often against stocks that I never plan to own.
The important thing if you want to be building wealth with put option selling will be to sell puts on securities you will not mind owning and also look for stocks that are relatively flat as far as their price goes. Flat stocks are stocks that will move at most $3 in a four week period and possess very low PE ratios.
I?ve found that I really also have a good deal of success by stock trading in the $20 ? $30 price range. Anything higher as well as cheaper is commonly too risky if you ask me.
I have been investing for over a decade and have done meticulous research on how to build wealth. My primary focus is on strategies that can create low risk residual streams of income.
If you?re ready to get started with your wealth creation strategies, then visit http://bestresidualincomestrategies.com/ to find the best advice on making residual income today.
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Source: http://financehelpnews.com/business-finance/grow-wealth-online-with-put-option-investing
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