Leadership Coaching BlogFast Money with Stock Options

Stock Options – How do they work and how can I use them to make fast money?

Stock Options are derivatives which take advantage of certain principles that can make us large amounts of money with minimum input in small amounts of time. Basically, one stock option allows you to have control over 100 shares of stock.

You have to decide if you will select a call option or a put option. A call is an educated guess that the stock will increase in the short-term and a put is an educated guess that the stock will decrease in the short-term.

The key to options is quite simple – buy deep in the money options.

What does that mean?
Spend more money to acquire an option that is closer to the current value.
(Quick tip: You’re not chancing your money more so by spending a larger amount to get an option closer to the current price but, rather, quite the opposite).

The key to not losing your investment is to research the company you’re interested in by understanding their current analysis (http://finance.yahoo.com/) and when you are certain that the value will either go up or down substantially in a short-time – go for it.

(Quick tip: learn from the best: if you lose 10% of your investment – pull out/take the loss. You got in at the wrong time and
misjudged the opportunity. Live to gain another day!)

My recommendation: Buy a call option deep in the money with a two month window on a company that you
understand and that has a greater earning potential which will increase the stock value in the short-term – (i.e. Amazon, Baidu, Apple)
If you would like a deeper understanding of this concept – post your questions here and I will provide answers to clear up any confusion.
The great thing about options is that they are confusing so not everyone can use them and the people who understand their value can make large amounts of money by playing the system.

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