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Build up Wealth On line using Put Option Investing

By Dale Poyser


The stock niche is certainly another one of the numerous ways for you to generate 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 possessor of this put options contract, you have the "option" to offer the stock at a certain price until you sell this option or the option expires.

Nearly all investors apply puts to safeguard their trading account from big movements to the downside as well as lock in profits.

For example, let's imagine an investor purchased a stock and it went up in price by about $10 per share. This is definitely a fairly 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 acquire a put option with a strike price which is a few prices below the current price of the stock. By using this method, you will be able to sell your stock at this strike price no matter what happens to the cost of the actual stock. For instance, if you purchased the stock at $200 and it increased to $250, you can actually buy the put at $240. With the $240 put option, irrespective of how low the stock goes, you can still sell it at $240! So, if the stock drops to $40 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.

In order that the stock buyer to secure his stocks by purchasing protective puts, he will need someone ready 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.

One of the keys to building wealth with put option selling is always to sell puts for stocks you wouldn't mind getting and also find stocks which are relatively flat with regards to their price goes. Flat stocks are usually stocks that move at most $3 within a month and also have really 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.




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