We all know that the market moves around: it could be up, down, sideways, bullish, bearish, and so on. All investors need a game plan, and trading is just one piece of it.
Investing and trading are two separate things. For example, you may want to buy a famous franchise restaurant some day. That is an investment. But you have no idea how you will get the money, so you develop an investment game plan. Well a part of that game plan may be to start trading, like taking your tax return and investing it in the stock market, for example.
Now that we know stock trading is part of the investment game plan, we have to dive deeper and construct the game plan to grow a small bank account to have enough money to pay for a franchise. This is where your trading plan comes into place. This would be inside your overall investment plan. How do you fully reach your potential in trading by thinking in through?
Most people only know how to buy stocks, but as we break down that game plan you’ll see that there are some flaws in it.
- Flaw number 1: If you buy stocks, you only make money if the stock goes up. And it with 100% certainty does not always go up.
- Flaw number 2: If you only have a small bank account, how do you invest with some of the bigger and better stocks? We learned in the last episode why we don’t trade penny stocks. So then how do you trade the big guys if you’re only buying stock and have a small bank account?
- Flaw number 3: If stocks and the market go sideways, do you have an opportunity to make money? No, you actually loose money due to inflation.
- Flaw number 4: This is the biggest flaw of them all – how do you make money if the stock falls? And you can actually make money if the stock falls, but not if you buy it.
So let me ask you a question: does this sound like a game plan for any type of market?
If trading is part of your investment plan, then wouldn’t it make sense to have the tools and strategies to profit in any type of market condition?
If you say “no” – then just stop reading right now, but if you said “yes”, keep reading because for the second half I’m going to dive into how options have more tools and strategies.
The Solution: Option Trading
There are two types of options: calls and puts. A call is when you think the stock is going to go up and a put is when you think the stock is going down.
- Solution number 1: Options can protect your profits if you own stock. For example, if you buy a stock and it does go up overtime, you can buy a protective put. Meaning if it falls below a certain amount, you can put it up for someone to buy at that amount.
- Solution number 2:
You can get exponential growth without trading on margin and without borrowing money from your broker. If you think a stock is going up and instead of buying it, you can buy an option and control the stock. Instead of owning the stock, you own a digital piece of paper that says you can get the stock at a particular price from someone else, even if the price goes up. You have control in case the price increases so you can make some money! It doesn’t matter if you “own” a piece of stock, it matters if you make a profit through trading. And options allows for that and costs less money to do so. - Solution number 3: If the stocks and markets go sideways you can profit by “selling time”. If you own shares of a company, and even if you have had them for generations, you can sell the right for someone to buy it from you at a higher price. You are selling an option for a certain amount of time, but are also making a profit. You get paid for waiting, and if that stock doesn’t hit the price you sold it for, you get to keep that money.
- Solution number 4: If the market or a stock starts to tank, you can actually profit from the sell off. For example, this is shown in my put option case study where I made 84% return in less than 4 days. When the market is bearish, most people are upset. But when you are trading options, it’s actually a good week! With put options, if the stock falls you can force someone to buy it at the price you paid for it.
If you know there are gaps in the only-buying-the-stock boat that will eventually drown you and keep you from your ultimate investment goal, and you know there are strategies out there that will help you make consistent income, then why wouldn’t you want to learn about it? Learn about the game plan on how to make
money whether the market is up or down, how you can control expensive stocks, and also profit just for waiting and selling time. You can even profit when the stock tanks! Learn how it works, and how you can make it work for you.
To learn more, register for my free option trading webinar by clicking here.
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