The Power of Stock Options
In order to generate consistent income in the most efficient
way possible, I use stock options. Options lose value over time therefore, it is best to sell them because the mantra is
sell high and buy low. If you were to buy options you would lose value everyday
unless the stock makes a large move.
In chart below you is an example of time decay of an option.
As you can see the option price is losing value every day. However, that isn’t
to say that you can’t make money buying options, it just takes a bit more
skill.
Stock Options
•
Give the investor the ability to buy/sell a
stock at a predetermined price.
•
High leverage products.
•
Enhance returns.
•
Limited loss/limited gain and/or limited
loss/unlimited gain.
•
Based off of statistical measures.
Components of a stock option
•
Price of underlying
•
Volatility
•
Time Decay
•
Intrinsic Value
Go for rich,
Ronald
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