21st Century Academy

Why Would You Trade Options?

Options Trading is a tern that generally makes many people think high risk, lose all your money. For the uneducated, and the person that can not stick to a trading plan, then I agree completely. However, if you do have a good Stock Market education, and can follow the rules of a trading plan, then options trading for a living may just be for you.

Options are financial derivatives, meaning their price is derived from the underlying share or stock price. As the stock price moves, so does the price of the option, only much more leveraged. This means, your wins could be magnified, as too can your losses.

To trade options for a living, does not mean you have to sit in front on a computer all day. Depending on which options strategy you are using, you may only have to look at the stock price once a day. Writing covered calls is a perfect example of this. On the other hand, if you trade directional options on an intraday basis, then you may be stuck looking at a screen the entire time that you are in the trade. The good news is, is that there is a happy medium for most traders.

Options trading can allow you to have a better balance of lifestyle, as it can certainly provide much more income than a job would ever bring most people, and it also allows you the time to do much better things in life that a regular job just does not allow for.

Before you rush out and quit your job to become an Options Trader though, you will want to have a good twelve months experience behind you, as well as a solid and tested trading strategy that allows for changing market conditions. What worked last year, may well not work now. Obviously you will also want to have a trading bank and plenty of money to pay the bills in the time that you are setting up.

Becoming a full time options trader is a great goal to move towards, yet you must ensure that you have the experience and foundations in place before jumping in the deep end.

Written by Clint Maher - 21st Century Academy
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