THE LOVELY WORLD OF OPTIONS !!!! Let me gi

THE LOVELY WORLD OF OPTIONS !!!!

Let me give you a quick description of what I am talking about:

Options give you the ability to use very low capital to profit/loss on Big Board Stocks.

You want to make money on GOOGLE because you think it is going up? Great, you take $5k in your brokerage and buy 7 shares of GOOGLE at $660 Tuesday for $4620 because you think it's going up. Two days later GOOGLE hits $693.90 and your investment is now worth 4857.30, a profit of $237.3 if you sold. Not to bad 48 hours of work, but you would have to be very luck to get 5% returns every week on a stock, and to only make $237.30 each time, you would struggle as a trader unless you hit every single time.

Now if you just took $500 instead of the $5000, and bought GOOG calls you could really see a nice return on just a 5% move. On Tuesday when GOOG was at $660, the $695 calls were .25. Instead of tying up(and risking) $5k of your capital, you could have taken $250 and purchased 10 of the GOOG $695 calls @ .25. While the equity trader is locking in his $237 gain today, you were selling your $695 @ 3.30 for $3,300 or a $3,150 profit in 48 hours.

Here was the text alert sent at the optionmillionaires.com site Tuesday:

GOOG looks to be turning and underperformed vs other techs. Could have a nice 5% move in th next 3 days meaning the 695 Wkl calls@.25 could be a nice 10 bagger

I made sure I grabbed my tickets:

11/27/2012 12:18:38 Bought 29 GOOG Nov 30 2012 695.0 Call @ 0.25

So here is the moral of the story. With options you don't have to be right all the time. Heck, you could be wrong 5-8 times and still make huge $$'s. $250 into 4-5 digits happens everyday!
But you have to be in it to win it!

Hope this post helps folks confused about options and why they ROCK!

( posted by JimmyBob ) @OMillionaires