Why Options Trading Is the Best Way to Beat Volatility in 2018

Posted On March 9, 2018 2:40 pm

If you think Wall Street is there to help you to make money, think again. That’s why the so-called “experts” are quick to tell you that “too-risky” options trading is for hard-core speculators only. They also tell you that they are the fastest way to lose money.

Of course they do. Why should they share this moneymaker with you? They’d rather keep it for themselves.

That’s why Money Morning‘s options trading specialist, Tom Gentile, just laid out the seven best reasons to trade options that anyone can follow.

You see, when the stock market is as volatile as it’s been so far in 2018, options can actually help you reduce risk while you profit from big swings. In fact, he says options trading is the only option when it comes to cashing in on volatility.

Just look at the key benefits of options trading in 2018.

  1. Less of Your Money Required

Options cost a fraction of shares of stock. And your risk is limited to the price of the options you purchase and no more. Let’s say you’re interested in buying a stock priced at $60.00 per share. Its near-the-money option might cost $5.00. Even if you are 100% wrong, you stand to lose only $5.00 (or $500 per contract). Buying 100 shares has you on the hook for $6,000.

  1. Bang for Your Buck

Let’s say your stock moves up to $65.00 per share. The option might go up to $9.00. The stock gained 8.3% but the option gained 80.0%. Of course, the profit potential has a lot to do with which option you buy, but you get the idea. This theoretical gain was mild. Triple-digit gains are much more common with options.

  1. Risk Control

Certain options strategies give you the opportunity to profit from a stock’s movement with even lower risk. Since there is no free lunch in trading, you do give up some of your windfall profit potential, but it is worth it to make steady – and still healthy – profits over time.

  1. Options Allow You to Trade All Markets

Whether the market moves up, down, or sideways, there’s always a way for you to profit using options. Options traders can make money in bear markets.

  1. Options Aren’t Just Tools for the Elite Anymore

Options are accessible to all people. And virtually any discount broker provides access to them. Not only that, a few taps on your broker’s smartphone app, and you can easily bring in piles of cash on your lunch break or even when you are on vacation.

  1. You Can Start with Very Little Money

One of the best benefits of trading options is that you don’t need much money to start. While the minimum amounts to start trading vary from broker to broker, most brokerages only require a deposit of $2,000 or less.

  1. Options Have Never Been Easier to Trade

Not only can you search for and place your trades online, but you can track them in a matter of seconds – and free of charge – using financial websites like Yahoo Finance. And if you’re that unique person who loves action, who loves winning, and who loves finding new ways to make money fast, then trading options is for you.

*This has been a guest post by Money Morning*

Related: Are Buybacks Distorting the Market? Here’s What You Need to Know. 

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