I can lose all my money, I can get a margin call and lose more than I put in the trade, 9/10 options expire worthless.
You’ve heard that right? is it true? YES it is. BUT if you only put in $500 on a trade that’s NOT in a margin account, then all you can lose is the $500.
You can also double or triple your money or more. AND yes most options expire worthless, but that’s often because they are bought as an insurance or hedge by money managers and retail traders seeking to protect themselves from sudden market volatility.
Here’s some facts on why options trading, done the right way is low risk and profitable.
- leverage. You control 100 shares of a stock or index with one option contract
- You can purchase a stock or index option for a fraction of the cost of buying the underlying stock
- You can make money when you trade options whether the market is up or down
- There are many highly liquid options on stocks, ETFS and indices
- Your profit potential is UNLIMITED
- Risk is limited to the amount you invest if you buy calls and puts and not on margin. As little as $100
- You can achieve huge leveraged gains buying options during expiration week, when premiums are extremely low. With Weekly Options, there is an expiration week every week.
CBOE Holdings Reports All-Time Record Trading Volume In October 2014. Volume Averages a Record 7 Million Contracts Per Day – Up 29% from October 2013 and 37% from September 2014 and that’s just the CBOE exchange. Option trading has grown in popularity significantly in the last 10 years.