Turbo charge your profits with Options
I know many people who trade stocks. Most of the US house holds
have stocks in various companies. Have you tried options?
Many people think Options are only for professional traders and
the big boys. It is not so. Let me explain in simple terms what
are the pros and cons of options.
Here is how the option works. Assume that you see a house in
your street and the owner is planning to sell it retiring and
moving to Florida within one year. The current market price for
the house is $215,000. You go and talk to the owner Brad and
tell him "Hi Brad; I would like to lock in this house for the
price of $220,000; I will have the right to buy this house for
this price for one year (i.e. till December 2006). For this I
will pay you $2000.". Now you and Brad come to an agreement;
Brad gives you the right but not an obligation to buy the house
till December 2006 at a price of 220,000. You have the right and
not the obligation that is important which means if the house
price goes down you don't need to buy it at 220K.
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