TOP FIVE REASONS TO BE AN OPTIONS TRADER – July 12, 2021
NUMBER 5 – ABILITY TO TRADE BOTH SIDES OF THE MARKET
You can trade the market up and trade the market down. Most traders who buy stock don’t know how to trade the market to the downside. With Options it is easy. You just buy a put option and with the power of leverage, you can get into large positions with little capital.
NUMBER 4 – THE POWER OF LEVERAGE
Options are highly leveraged instruments and as such, you can trade big size with little capital. For retail traders who are starting out a few thousand dollars to control hundreds of shares of Facebook is pretty amazing. It allows small traders to act big and trade with the leverage.
NUMBER 3 – ABILITY TO BE FLEXIBLE WITH YOUR TRADES
If the market goes down and against your position in stock all you can really do is take the loss or buy more stock. But why would anyone want to increase their position size on a bad trade? With options, you can change your position to be favorable even if the underlying stock continues to go down. You can adjust and move with the markets.
NUMBER 2 – DEFINED RISK TRADES
With stock, you purely enter in a directional position and you are at the mercy of the markets. If the market goes up you make money. If it goes down you lose money. If the market goes sideways you make nothing. You have no ability to adjust and with stop losses you can lose when markets close. With defined risk positions you lock in your max loss on any given trade and you are protected 24/7, unlike stock. When markets close you have competing positions that lock you in.
AND THE NUMBER 1 REASON IS…..
Freedom!! Freedom to do what you want to do when you want to do it. Freedom to be your own captain of your own ship. You control your own destiny. No dependency on other people or organizations. Trading you can take anywhere in the world as long as there is an internet connection. You can trade on a remote tropical island, or you can trade in a coffee shop. Kind of like green eggs and ham you can trade anywhere, anytime in any place.
By trading only stock you can miss out on some of these benefits. But trading options can be simple and you do get these benefits.
Author: Chris Vermeulen