What are realistic returns for options income trading? | Options simply explained #options

Options trading is one of the most popular investing strategies in the world. Options are not for everyone but they can be used safely to make a few extra percentage points per year while remaining safe.

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▶️WHAT ARE OPTIONS?
Options are contracts that represent underlying equities like stocks. One option represents control over 100 shares.

▶️HOW ARE OPTIONS DIFFERENT THAN STOCKS?
Options have a lot more "options" than just buying and selling, and unlike stocks, options have an expiration date.

▶️WHY USE OPTIONS?
Options allow you to leverage and get control over more stocks for less money.

▶️PUTS AND CALLS:
There are only two forms of options - puts and calls. You can buy buy and sell both puts and calls. Here's what that means:

Buying a Call - this is a bullish sentiment (you think the stock is going up) beyond the strike price, before the expiration date. You have the option to buy shares at the strike price on or before that particular date. You pay a premium to buy this option contract.

Buying a Put - this is a bearish sentiment (you think the stock is going down) lower than the strike price before the expiration date. You have the option to sell a stock at the strike price on or before a particular date. You pay a premium to buy this option contract.

Selling a Call - this is the obligation to sell stock at a certain strike price by the expiration date. You make money by collecting a premium when you sell this call option. If the price of the stock does NOT reach the strike price you do NOT have to sell the stock and you keep the premium.

Selling a Put - this is the obligation to buy stock at a certain price by the expiration date. You collect premium for selling this put option. If the stock price does NOT reach the strike price you do not have to buy the stock and you keep the premium.


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DISCLAIMER: I am not a financial adviser nor a CPA. These videos are for educational and entertainment purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.

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