How to make money with options trading

There is a neat trick I learned from a hedge fund trader, and that is Swing Trading deep in the money call options.
Here is what this means: first off swing trading means: holding a stock or an option for a time period of one week to one month. Its not day trading but its not buy and hold either, its the holding period that every Billionaire Hedge Fund Manager uses.
Secondly, deep in the money call options, are a great way to trade stocks because they give you super leverage up to 20 times for little or no cost, yet with less risk than trading options outright. Basically when you buy a deep in the money call option, you are buying the stock almost outright, a deep in the money call option is a stock replacement strategy, because the option moves almost 100% in correlation with the underlying’s stock move.
How, well there is a options term called Delta, its simply tells you at the current time how much the option will move in percentage terms versus the underlying stock, if the option has a Delta of .50 its means that the option will move 50% of the underlying stock’s move. For example an option that has a .50 delta will move 50 cents when the underlying stock moves a dollar.
Now a deep in the money option usually has a delta of .60 or above meaning that the option will move $.60 cents for every dollar move in the underlying stock. Sometimes you can even find a deep in the money call option that has a .95 delta meaning that the option and the stock move almost 100% in tandem with each other. A stock replacement strategy is when you get an option that moves $.60 to $.95 cents for every dollar move in the underlying stock.
By using deep in the money options, as a stock replacement strategy you are getting free leverage, (because to margin a stock it can cost you up to 7% an interest a year) an option has zero interest or borrowing costs.
Also a real quick caveat, never buy a option whether its a call or put, unless you know that there is going to be an event (i. e. earnings, merger, corporate announcement, or an economic release etc) because you have time decay on an option, basically the longer you hold the option, the more money you lose, since you lose a little bit of money every day when you hold an option.
So to summarize to make the perfect options trade, that will make you a 100% in a month you need the following things.
1) A Swing Trade - an option that you are going to hold for a week to a month time period at most.
2) A Deep in the Money Option with a Delta above .60, so that it moves almost in tandem with the underlying stock.
3) An event that is going to occur within the time period of one month or less.
4) and A Cheap Option, and this is very important, basically an option is cheap if the current volatility is below its historical volatility, this sounds confusing, but all it means is this. Is you want to find stocks that have not been volatile or have been trading flat or in a range for the last 2 or 3 months, just pull up a chart and if the stock has been dead or flat, than you know the volatility is low and the option will be cheap.
So here is a trade that I am making today, using this deep in the money option/stock replacement strategy.
I am going to buy 10 deep in the money $6 May Sprint ($S) call options for .20 cents an option, so for 10 calll options my total cost is only $200. So to summarize I am buying a call option on the stock Sprint ($S) and with a May Expiration (so I get to hold the option when Sprint announces earnings on April 22nd) and I am buying the option at the $6 strike price.
Here is why I am so excited about this trade, first off Sprint ($S) has traded flat or dead in a range for the last 3 months, so the options are cheap.
Secondly Sprint ($S) is announcing earnings on April 22, almmost a month from today, so I know there is an event that will create movement or volatility in this option.
Third for just $20 cents or $20 dollars I am controlling 100 shares of Sprint stock on one call option, or in my case I am controlling 1000 shares of Sprint stock for only $200 dollars, that is incredible leverage, since if I purchased 1000 shares of Sprint ($S) stock, it would cost me over $6000 dollars, yet I am controlling that same amount of stock for only $200, thats 30 to 1 leverage.. Awesome..
Also I think based on Spint’s earnings estimates, that Sprint could trade as high as $6.60 after they announce earnings on April 22, that means I would make almost 200% on my option trade in just 4 weeks time. Now thats what I call a Billionaires Trade.
To learn more about this secret options strategy, or what I call the super leverage stock replacement strategy, where you can make 100% in a month using deep in the money option me at.

A Simple Guide To Making Money With Options.
Over the past few decades, we've seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed.
As a quick example, let's say IBM is currently trading at $100 per share. Now, let's say an investor purchases one call option contract on IBM with a $100 strike price at a premium of $2.
The call option gives the buyer the right to purchase shares of IBM at $100 per share. In this scenario, the buyer could use the option to purchase those shares at $100, then immediately sell those same shares in the open market for $105. Because of this, the option will sell for $5 on the expiration date.
Using the same analysis as shown above, the call option will now be worth $1 (or $100 per contract). Since the investor spent $200 to purchase the option in the first place, he or she will show a net loss on this trade of $100.
If IBM ends up at or below $100 on the option's expiration date, then the contract will expire "out of the money," meaning it will now be worthless. In this scenario, the option buyer will lose 100% of his or her money (in this case, the full $200 that he or she spent for the contract).
Profit Amplifier Closed Trades.
Aside from a few road bumps, our path to success has been very profitable. In fact, my readers and I have made an average return of 14.5% on our trades so far, and our average holding period stands at just 40 days -- that's good for a 132% annualized return.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.

Call Option Trading Example.
How To Make Money Trading Call Options.
Example of Call Options Trading:
Trading call options is so much more profitable than just trading stocks, and it's a lot easier than most people think, so let's look at a simple call option trading example.
Call Option Trading Example:
Suppose YHOO is at $40 and you think its price is going to go up to $50 in the next few weeks. One way to profit from this expectation is to buy 100 shares of YHOO stock at $40 and sell it in a few weeks when it goes to $50. This would cost $4,000 today and when you sold the 100 shares of stock in a few weeks you would receive $5,000 for a $1,000 profit and a 25% return.
While a 25% return is a fantastic return on any stock trade, keep reading and find out how trading call options on YHOO could give a 400% return on a similar investment!
How to Turn $4,000 into $20,000:
With call option trading, extraordinary returns are possible when you know for sure that a stock price will move a lot in a short period of time. (For an example, see the $100K Options Challenge)
Let's start by trading one call option contract for 100 shares of Yahoo! (YHOO) with a strike price of $40 which expires in two months.
To make things easy to understand, let's assume that this call option was priced at $2.00 per share, which would cost $200 per contract since each option contract covers 100 shares. So when you see the price of an option is $2.00, you need to think $200 per contract. Trading or buying one call option on YHOO now gives you the right, but not the obligation, to buy 100 shares of YHOO at $40 per share anytime between now and the 3rd Friday in the expiration month.
When YHOO goes to $50, our call option to buy YHOO at a strike price of $40 will be priced at least $10 or $1,000 per contract. Why $10 you ask? Because you have the right to buy the shares at $40 when everyone else in the world has to pay the market price of $50, so that right has to be worth $10! This option is said to be "in-the-money" $10 or it has an "intrinsic value" of $10.
Call Option Payoff Diagram.
So when trading the YHOO $40 call, we paid $200 for the contract and sold it at $1,000 for a $800 profit on a $200 investment--that's a 400% return.
In the example of buying the 100 shares of YHOO we had $4,000 to spend, so what would have happened if we spent that $4,000 on buying more than one YHOO call option instead of buying the 100 shares of YHOO stock? We could have bought 20 contracts ($4,000/$200=20 call option contracts) and we would have sold them for $20,000 for a $16,000 profit.
Call Options Trading Tip: In the U. S., most equity and index option contracts expire on the 3rd Friday of the month, but this is starting to change as the exchanges are allowing options that expire every week for the most popular stocks and indices.
Call Options Trading Tip: Also, note that in the U. S. most call options are known as American Style options . This means that you can exercise them at any time prior to the expiration date. In contrast, European style call options only allow you to exercise the call option on the expiration date!
Call and Put Option Trading Tip: Finally, note from the graph below that the main advantage that call options have over put options is that the profit potential is unlimited! If the stock goes up to $1,000 per share then these YHOO $40 call options would be in the money $960! This contrasts to a put option in the most that a stock price can go down is to $0. So the most that a put option can ever be in the money is the value of the strike price.
What happens to the call options if YHOO doesn't go up to $50 and only goes to $45?
If the price of YHOO rises above $40 by the expiration date, to say $45, then your call options are still "in-the-money" by $5 and you can exercise your option and buy 100 shares of YHOO at $40 and immediately sell them at the market price of $45 for a $3 profit per share. Of course, you don't have to sell it immediately-if you want to own the shares of YHOO then you don't have to sell them. Since all option contracts cover 100 shares, your real profit on that one call option contract is actually $300 ($5 x 100 shares - $200 cost). Still not too shabby, eh?
What happens to the call options if YHOO doesn't go up to $50 and just stays around $40?
Now if YHOO stays basically the same and hovers around $40 for the next few weeks, then the option will be "at-the-money" and will eventually expire worthless. If YHOO stays at $40 then the $40 call option is worthless because no one would pay any money for the option if you could just buy the YHOO stock at $40 in the open market.
In this instance, you would have lost only the $200 that you paid for the one option.
What happens to the call options if YHOO doesn't go up to $50 and falls to $35?
Now on the other hand, if the market price of YHOO is $35, then you have no reason to exercise your call option and buy 100 shares at $40 share for an immediate $5 loss per share. That's where your call option comes in handy since you do not have the obligation to buy these shares at that price - you simply do nothing, and let the option expire worthless. When this happens, your options are considered "out-of-the-money" and you have lost the $200 that you paid for your call option.
Important Tip - Notice that you no matter how far the price of the stock falls, you can never lose more than the cost of your initial investment. That is why the line in the call option payoff diagram above is flat if the closing price is at or below the strike price.
Also note that call options that are set to expire in 1 year or more in the future are called LEAPs and can be a more cost effective way to investing in your favorite stocks.
Always remember that in order for you to buy this YHOO October 40 call option, there has to be someone that is willing to sell you that call option. People buy stocks and call options believing their market price will increase, while sellers believe (just as strongly) that the price will decline. One of you will be right and the other will be wrong. You can be either a buyer or seller of call options. The seller has received a "premium" in the form of the initial option cost the buyer paid ($2 per share or $200 per contract in our example), earning some compensation for selling you the right to "call" the stock away from him if the stock price closes above the strike price. We will return to this topic in a bit.
The second thing you must remember is that a "call option" gives you the right to buy a stock at a certain price by a certain date; and a "put option" gives you the right to sell a stock at a certain price by a certain date. You can remember the difference easily by thinking a "call option" allows you to call the stock away from someone, and a "put option" allows you to put the stock (sell it) to someone.
Here are the top 10 option concepts you should understand before making your first real trade:
Options Resources and Links.
Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority (OPRA):

Can you Really Make Money with Binary Options?
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Binary options trading is very popular in many countries around the globe. However, most people still ask the question "can you really make money in binary options". In this article I will try to answer this question and give you a few tips on how you can make money trading binary options.
The short answer is that yes, you can make money online with binary options trading if you only trade at legitimate binary options brokers and learn the fundamentals of binary trading and employ proper trading strategy.
Binary options trading is a form of investing through predicting the movement of various assets such as gold, silver, the USD etc. It is very similar to other forms of investing such as forex and stock trading. It’s however simpler, has relatively fewer risks (in the sense that you will always know in advance what you might lose) and can offer larger payouts.
The idea is that you can make money in binary options only if you treat it as a real form of investing. This means learning how it works, learning how to read charts and learning how you can make accurate predictions. All these are not that difficult but it takes some time. If you treat it as gambling and just make random predictions then you will obviously not win.
Trading binary options online is not as complicated as many people think it is. You don’t have to be an economics expert in order to make money by trading binary options. Below these lines I'll reveal why making money with binary options is actually pretty simple.
Quick guide: Yes, you can make money in binary options. The easiest way is to use a binary options robot, such as Signals365 that will automatically analyze the markets and make accurate predictions for you. This is fully automatic and comes wth a success rate of around 80%.
At this moment the most reputable binary broker where you can make money if you use proper strategy is IQ Option. IQ Option has a payout rate of 88% and is also the broker with the most licenses and government-approvals, which means it's 100% safe and fair. If you are from the US you can trade at BinaryMate instead, which is also a reputable broker.
Bitcoin Binary Trading.
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Can You Trade Binary Options For A Living?
Depositing Money at a Binary Broker.
Do’s and Don’ts in Binary Trading – Full Guide.
Everything About Binary Options for Dummies.
Exchange Trading & CBOE Options.
First Steps in Options Trading.
Future Changes and Developments.
Future of The Industry.
How to Minimize Binary Options Trading Risks.
How to Trade the EUR/GBP in Binary Options.
How to Trade the EUR/USD in Binary Options.
How to Trade the USD/JPY in Binary Options.
How to Trade USD/GBP in Binary Options.
How to Withdraw Cash at Brokers.
Registering at a Binary Options Broker.
Truth About Options Trading.
When Will Binary Options Go Mainstream?
Why is it so Difficult to Withdraw Money?
Why Most People Do Not Make Money in Binary.
Is it Possible to Make Money in Binary Options Trading?
A lot of interested traders are asking themselves the question if you can really make money with binary options? Obviously this is a perfectly legitimate question considering that most people have not traded binary options in the past and generally believe that investing is a very difficult activity.
The answer is that you can indeed make money in binary options trading. However, you will have to put an effort into it. As explained above, you will have to learn money management, reading of charts as well as the usage of indicators.
Naturally, you will have to put an effort into it if you want to make sure you’ll be able to generate money consistently. If you treat it like gambling then obviously the end result will also be like gambling and you will end up losing money instead of winning.
However, if you follow simple online trading strategy, like the ones that I have listed above, then you will have the potential chance to generate profits consistently. Also, the more you trade, the easier it gets later on. After a few months, trading financial assets will come natural to you, allowing you to make money consistently.
How does it work?
In binary options you will have the possibility to predict the movement of various assets such as stocks, currency pairs, commodities and indices. Making a prediction is possible after purchasing an option.
An option has only two outcomes (hence the name “binary” options). This is because the value of an asset can only go up or down during a given time frame. Your task will be to predict if the value of an asset with either go up or down during a certain amount of time.
In order to purchase an option, you will have to invest a certain amount of money. Usually, you can invest as low as $5-$10 and a high as several hundred. If by the time of the option’s expiration your prediction will have come true, you will receive your investment back plus a commission that will be the profits you made.
If your prediction will be false, then you will lose the invested money. Binary options trading is not gambling because if you pay attention to what’s happening in the business world you may be able to make accurate predictions. In gambling however, you will not be able to predict on what color the roulette ball will land, no matter what.
The simplest way to make money in binary options is by trading on news events. Below you will find an example of such cases:
Long-term trades.
Usually around September and October each year Apple is known to release a new iPhone and several additional products. Your task will be to check out when this will happen (usually, these events are announced months ahead).
Add the date to your calendar and around 1-2 days before the event buy a binary option that predicts that the stock value of Apple will go up during the next 2-3 days. You can be fairly sure that your prediction will be correct, as Apple’s stocks usually increase after a new product launch. And boom, this is it; you just made money with binary trading.
As you know, there are hundreds of large companies, such as Google, Samsung, Sony, and Microsoft, etc. Just check out when these companies are about to launch a new product and mark it in your calendar. You will usually find 1-2 such major events during every week of the year.
With this strategy you may expect to win around 70% to 80% of the time but it requires a lot of preparations like following news events. It’s can potentially be easy money through, so it should be the first strategy you use to make money in binary options trading.
One of the best brokers on the internet right now that have many long-term trades is IQ Option. As explained above, IQ Option is also the first broker that has received a real government financial trading license, meaning it’s fully legal and regulated.
Hint : You do not have to do all this by yourself. You can use a signal service such as Signals365 that will automatically look for long-term trades and make accurate (up to 80%) predictions for you.
Short-term trades.
After you become a little more experienced you can move on to short-term trading. As you have noticed, trading on news events involves long-term trades such as several days or weeks. A more advanced way is using short-term trades that expire within just a few minutes or seconds.
Here, you will not be able to use news events, as things happen too fast for news to have any influence on asset prices. Instead, you are expected to read the charts of various assets and look for trends.
Trends are predefined patterns in the short-term movement of assets. This means that if you catch a pattern in its early development, you can predict what happens next (as patterns usually behave in the same fashion).
These are a bit more complicated strategies but they are great because they allow you to make money in binary options on a daily basis as they involve short-term trades, therefore don’t have to wait for major news events (like product releases).
The best is always to use a combination of both strategies if you want to make money consistently using binary options. If you are a beginner, you should first start with the long-term strategy I described above (the one with Apple as example) because it’s very easy and there you will have realistic winning chances even as a complete newcomer. Then later diversify to short-term.
For short term trades I usually recommend IQ Option. This is because short-term trades are usually riskier and IQ Option offers a minimum deposit of only $10 and allows you to invest as low as $1 per trade.
Tip: Short term trades are a bit harder to predict than long-term trades, but they can make you money much faster. It’s recommended to use a robot (a tool that will automatically execute accurate trades for you), such as Signals365. This way you will be able to make money right away with minimal work on your part.
Is it legitimate? Is it legal?
Reputable financial service providers and investment firms first introduced binary trading in the United States. After this, multiple countries decided to adopt this practice and make it a legal form of financial trading and investing.
At this moment binary trading is officially regulated in a large number of countries on the planet including the United States, the United Kingdom, Cyprus, Japan, South Africa and more.
In order for financial service providers to be able to offer binary trading services, they will have to pass an independent evaluation by various government agencies. Only those online trading companies that offer legitimate services will be awarded with a financial service provider license.
Also, trading financial assets online by private people is at this moment legal in all countries on the planet. This is also valid in countries where binary options is at this moment not yet regulated. – To our knowledge binary trading isn’t illegal in any countries at this moment.
Do I Have to be an Expert to Make Money in Binary Options?
A common misconception is that you will have to be a financial and business expert in order to successfully trade binary options. However, this is not true at all. Perhaps it’s true when it comes to traditional stocks trading but definitely not true in the case of binaries.
You don’t have to be an expert to predict the movement of certain assets. Just think of the example I gave you above with Apple and long-term trades about on how to make money in binary options. Just based on that example you already learned one of the simplest ways to successfully trade binaries. There were no complicated tools or economic theories involved.
To add on the strategy mentioned above, another example is knowing when the US Federal Reserve is printing money.
You can find this info in the news. In such cases, the value of the USD almost always depreciates. So, in cases like this you can place very accurate investments on the outcome that the conversion rate between the USD and other currencies will increase.
And now you already know two very easy methods that you can use every single time you trade. So, as you can see, you can definitely make money by trading binary options if you do it properly and don’t just make random predictions.
You can implement these strategies at binary options brokers. The idea is to always choose legit and reputable brokers such as IQ Option to avoid being scammed. USA traders can choose BinaryMate. You can also use various tools such as signals to help predict the movement of assets. The best tool of this kind at this moment is Signals365.
Learn more and become a winner.
If you want to make money with binary options then read our detailed educational articles and strategy guides. These will teach you to efficiently trade financial assets and increase your winning probabilities.
Latest Binary Options Articles & Guides.
Ever wondered what the truth behind binary options risk free trades is? In this article I will be shedding a light on this very interesting and potentially rewarding concept.
In this ultimate guide to binary options trading you will learn everything you need to know about this form of online trading. It doesn't matter if you have no experience at all. Read this article and become a pro trader right now.
In this latest article I will be explaining how you can trade USD/JPY using binary options. You will learn about what influences the movement of this forex pair so that you can make accurate investments at your binary options broker. You will also find out what the recommended and safest binary brokers are for USD/JPY.
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15 Comments on "Can you Make Money with Options?"
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What is the difference between trading binary options and going to the casino and betting on red/black at a roulette table?
Thea: regarding this – STRICTLY FOR THOSE WHO TOOK BONUSES AND CAN’T WITH-DRAW/LOST FUNDS AFTER TRADING.
Is it possible to get my money back lost trading Yahoo and other stocks on Etrade?
hi knud, did you get your money back?
No wealth is actually generated with binary options, unlike a stock market. You play against the broker, just like in a casino. If the broker is bankrupt, you will not even get your winnings back. One thing I do not understand - why do brokers pretend to help us with their staff of analysts? Isn’t it counter-productive to them?
So where does the money come from? Someone has to loose, in order for both the broker, and the punter to make money.
what happens if say i started off with £10K, turned it into £1M and the broker didn’t have enough money to pay me the £1M i have made? like when i go to withdraw my £1M the broker couldn’t give me the funds because they do not have it available?
You should never keep that much money in your trading account.
Lets say you start with 10k… and make around 30k. You should withdraw that 20k right away and keep trading with your remaining 10k.
You’re trading against other traders too.. if you do a put trade for £100 and someone does a call trade for £100, one of you will have to lose that trade.. look up market makers and market exposure..