Here at INO.com, we are often asked about options trading and whether our premium service, MarketClub, can be used to trade options. While MarketClub does not carry stock options specifically, the truth is, many people have had a great deal of success trading options with MarketClub. One person in particular, who you are about to meet below, has done so for years and even helped teach others how to thrive using options.
This could be the first of many articles! We're trying to gauge interest in options trading with MarketClub, so we'd like to encourage you to participate in our poll.
Hello my name is Trader Travis. Today I want to share with you the secret to how you could have used MarketClub and stock options to earn a 22% return on investment in just 11 trading days.
Sounds unbelievable, but if I hadn't experienced this first hand I'd still be in disbelief.
I'm not sure what your particular financial situation is, but maybe you're one of the many people who are afraid you won't be financially independent at some point in your life, or maybe you're afraid of losing money in the stock market (again) and would like to know how to guarantee you won't lose money...
If so, would you like to learn how to create true financial freedom and an income source you control?
I hope so, because stock options (aka options trading) empowers investors who are tired of losing money in the stock market to earn 2-5% each month without being glued to the computer all day.
And right about now you may be saying, "Yeah right..."
And I have to admit, it does sound too good to be true, but 1.) It is true and 2.) I completely understand how you feel.
I'm skeptical by nature so even I thought it sounded farfetched, but my mentor showed me just how little I knew about investing.
Essentially, options trading is just another way to invest in the stock market. You can invest in bonds. You can invest in stocks or commodities, and options trading is just another component of stock market investing.
The great thing about trading options is a 1% gain in the stock market can often produce a 10% gain on your options contract (more on this later).
Also, stock options allow you to make money when the stock market is going up, down, or sideways.
Said another way, stock options are how investors make money when stock prices are going down or just remaining the same.
Now let me take a moment to teach you a little bit about stock options and then show how you can use them with MarketClub.
For the sake of simplicity, I'm going to refer to options on stocks only, even though options can be traded on commodities and other securities as well.
Warning: I'm about to hit you with some technical jargon, but then I'll simplify it a little later on.
The primary vehicle behind options trading is something called a stock option contract.
Definition of Stock Options: If you buy or own a stock option contract it gives you the "right, but not the obligation", to buy or sell shares of a stock at a "set price" on or before a "given date" (time period).
For example, a GLD March 120 call option has an exercise price of $120 a share. If the option is exercised, the owner of the option will "buy" 100 shares of GLD stock for $120 a share.
Options trading is very involved and can be quite complex. For now, don't stress about getting a full understanding; that will come with time. Just read for comprehension, not a full understanding.
Now let's bring MarketClub's Trade Triangles into the picture
Stock Trade: On 1/15/15 you bought 100 shares of GLD at $120.5 for a total of $12,050. This was based on the green monthly trade triangle.
Option Trade: Also on 1/15/15 you bought 1 GLD March 2015 120 Call option at $4.35 ($435). That one option contract controls or represents 100 shares of the underlying stock (GLD).
One of the many benefits: a lot of people use options because buying the stock cost $12,050, but you can simulate the same 100 share ownership with the option contract and it only cost $425. This is a very important point as you will see in a moment.
On 1/30/15, the stock closed at $123.45 and the option contract closed at $5.30. Thus far, your profit on the stock is $2.95 ($295) and $.95 ($95) on the option.
So you made more money on the stock, but you also invested more, so let's look at percentages.
Your stock profit is +2.4% based on the $12,050 investment and your option profit is 22.4% based on the $425 investment.
So the option, percent wise, made almost ten times more money.
And no it's not a fluke, it happens all the time which is why people are so attracted to options trading.
I'm a full time options trader and it might surprise some to hear me say that despite the huge profit potential of options I don't suggest people purely trade options.
And here is why...
Because when people make that decision based on the numbers I just outlined they are only thinking of making money (greed).
And despite what the movies will have you believe, greed is never good when it comes to trading.
The Ugly and Unedited Truth About Success
As traders salivate over how much money they can make trading options they never consider losing money and believe me the downside of options is ugly.
Options are just a tool, period! A medical scalpel in my hand can be bad news for the patient. A scalpel in the hands of a trained doctor can save a life.
Essentially, the improper use of options, like any powerful tool, can lead to damage.
It takes many years to learn how to be a skilled doctor and it usually takes many years to become a skilled trader.
Everyone wants to grow their nest egg...
Everyone wants to generate income...
Everyone wants a bright financial future...
And everyone wants to make sure their loved ones are taken care of.
The truth behind the dream of becoming a successful investor is that you will most likely go through hell and back before you succeed. It will most likely take longer to achieve consistent success than you want it to. And it will be harder than most product promoters claim it to be.
However, I still encourage you to pursue the life of an options trader because it is one of the most rewarding experiences in life! And if you can handle the truth above then you might have a chance of becoming a successful options trader.
That's all I have for you today. I hope you enjoyed the peek inside the crazy world of options trading.
If you'd like to learn more about options or even how to use them with MarketClub, then let them know in the comment section below.
If there is enough interest I'll share another benefit of options trading as well as the secret to options trading success.
Travis Wilkerson (AKA Trader Travis)
Travis Wilkerson (AKA Trader Travis) is the lead stock option trainer and founder of the Option Profit Formula Success Academy. To date he has published well over $3,000 of free information through his website TraderTravis.com.
Travis grew up poor, in a small town in Virginia. As a kid, he vowed to break free from poverty and when he was older he was fortunate enough to be mentored by several multimillionaires. His mentors taught him the secrets to how they built their fortunes and one of the many things he learned was stock and options trading. Travis has since invested in stocks and mutual funds since early 2002 and becomes a full-time options trader late in 2009.
Travis's hugely popular coaching program has a documented 63.83% success rate in an industry that has a speculated 90% "failure" rate.