How I Made $5,000 Trading Options In Under 2 Months
You can make far more money trading options than buying and holding onto stocks. You can utilize options trading strategies that complement your portfolio, protect yourself from downside, or straight up gamble depending on how you utilize options.
However, options trading isn’t for the faint of heart. Just as you can make astronomical gains, you can also take on heavy losses if you don’t invest with the right approach.
Success in options trading is a combination of skill and luck. Skill puts you in the position for massive gains and luck allows those massive gains to materialize under your timeline.
In this article, I’ll talk about some of the trades I did, what to do, and what to avoid.
Selling Covered Calls Is The Best Way To Get Started
For a while, I resisted buying options because I saw it as gambling.
And yes, you can buy options in a way that makes it pure gambling, but that doesn’t apply to all bought options (we’ll talk about buying options later).
My introduction to options was selling them.
When you sell options, you collect a premium rather than you paying up to buy the option.
You become the seller rather than the buyer and get paid accordingly.
Selling covered calls and cash secured puts has allowed me to earn returns that crush what I used to make back in my dividend investing days.
I talked more about selling covered calls versus dividend investing in this article:
To set up a covered call, you need 100 shares of a stock. You then set a strike price for that covered call. The closer the strike price is to the current price, the more you’ll earn in premiums.
Setting out a further expiration date also increases your premiums.