Options Trading Strategy For Beginner Options Traders!

Many of you have heard of options trading, but have never traded them. But there is an options trading strategy for beginner options traders that will help you make the leap into options trading!

But you probably do understand how to trade stocks. So that's where I am going to start you on your options trading journey.

So, you've been selling stocks and buying stocks in some manner for many years. It might have been through your retirement account or your IRA.

So at least you know the concept - you buy when the price is low and you sell when the price is high.

I'm going to ease you into options with something you already understand, which is stock trading. I'm going to show you, what I like to call, Smart Cookie trading. Let's get started.

What if I could show you how to make money before you even own the stock you want to buy? You heard me right, you pick a stock because you think it's set to take off. For this example we're going to use the stock TECK (Tech Resources Limited).

Understand I'm not recommending this stock to you. You should always do your own research before investing. But I will share the reasons I like this stock the transportation world is changing and will need twice as much electricity as more and more vehicles go electrical the copper demand will dramatically increase.

Now TECK's market cap is $20 billion and the copper assets they own alone are currently valued at $16 billion.

There are other reasons I like the stock for my own portfolio. They pay a quarterly dividend. Now it's not a big dividend but it is a dividend.

The stock is currently trading about $35 per share, which makes it much more affordable to own more shares and profit even more. And it recently had a huge fall because the whole market went down. Lastly, it has weekly options.

Bottom line, I want to own this stock.

Here's where the smart cookie trader in me shows its face.

Instead of just purchasing the stock at its current value, I sell naked puts until the stock is PUT to me.

For example, let's say I want to own 500 shares of TECK. Here's what I do.

I sell PUTs one strike out of the money and bring in about $0.62 of that share every single week. This is called trading naked. Normally it's a very high risk trade unless you truly want that stock PUT to you. The stock is currently trading at $32.75.

As I write this material, for the stock to be PUT to me, the trading price of the stock would have to drop slightly by $0.75 to the share.

I get to keep that premium, even if the stock never gets put to me. Even if it does get put to me, that sold premium is mine to keep.

So let's say this goes on for four weeks, and then the stock is finally put to me. Well I've made $0.62 a week for four weeks or $2.48 per share. I've just gained 7% without even owning the stock. But this is only half the story of smart cookie trading.

Let's say the stock has gone up to $50 and I see a resistance area and decide it's time to sell that stock.

Rather than selling the stock, I start to sell covered CALLs each week wanting to be called out.

Every week I would sell the calls one strike out of the money until the price of the stock is at my strike.

Let's say this goes on for just two weeks, and I'm able to bring in $1 per share each week. Well that's $2 extra I've made in two weeks selling CALLs.

Here's the math.

I wanted to own the stock so I sold naked PUTs and brought in $0.62 a week. Well, after four weeks of service put to me but I made $0.62 times four weeks. That's $2.48.

The stock was put to me at $32 a share and after a while I saw it getting near resistance.

I decided to sell covered calls and I sold those for $1 a week.

After two weeks, the stock got called out but I have made $2 extra.

The profit calculation goes to the cost basis $32 I paid for the stock minus the $2.48 for selling puts minus the $2 for selling the calls that put my cost basis at $27.52.

The stock called out at $51.50.

That means I made $23.90.

But if I just bought the stock and not traded the options, I would have paid $32.75 and I would have sold it at my target price of $50. That means, my gain would have been $17.25.

That's a $6.73 difference. I made 39% additional put the smart cookie way and remember I decided to own 500 shares.

Tweaking the trade put another $3,365 in my pocket, a 39% higher profit just by changing some simple things in your trading.

This is just a small example of what we teach you at Investing Buddies.

You need to try us out because we can do the same for you. And I'm going to make it really easy for you. You won't have to spend a dime to see if investing Buddies is a good fit.

There's a free two week trial offer out there just for you. Click on the button below and open up your trading world.