EP 114: The Correct Way To Use Options – 3 Strategies To Use Right Now

I want to talk about the right way and the wrong way to use options and give you three of my best option trading strategies.

Let's get into it. 

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Options offer leverage. They give you ability to control stocks you don't own. 

Buying a put option is essentially purchasing insurance to protect your account from falling, and maybe even make some money. 

Consider put options like paying for car insurance. You pay a certain amount every month and may never use your insurance... but what happens when you do need it? Your insurance company will reimburse the value of your vehicle. 

The same can be said about the market. We can use put options to safeguard us from any potential threat that may be looming. We want to read the charts and look at economic reports that may forecast if there's something on the horizon.

This is one of the top strategies we teach at Power Trades University.

You can use options to literally negotiate with the market. 

As an example... Apple is trading at $100 a share, but you're only willing to buy it at $95 a share. 

With the covered put method, you can negotiate with someone that currently owns the stock. You will tell them you want to buy it at $95. They will even pay you for your offer. 

If the price never drops to $95, you don't have to buy it and you get to keep the money they paid. If it does drop to $95, then you'll be able to purchase at a discounted price. 

Now, this isn't something you can do for just any stock, there is a right and a wrong way to do it. You want to make sure you're choosing the right stock at the right price in order for a covered put to be beneficial for you.

If you own at least 100 shares of a company, you can rent your shares out to someone else at a agreed price. 

If the stock never drops to that agreed upon price, you get to keep the stock because you own it, and also keep the deposit money (or rental income) the other person supplied. 

This covered call method can give you passive income each month.

You can read more about covered calls and passive income by checking out the blog post and video about them specifically here. 

If these strategies are foreign to you, it's time to tap in and learn. 

You don't need to sit there with your stock portfolio and wonder what you should do with it. 

Consider checking out our Options Explained course to learn more and make this strategy work for you, not against you.