July 2012
Beginner
201 pages
5h
English
Content preview from Get Rich with Dividends: A Proven System for Earning Double-Digit Returns
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
CHAPTER 10
Using Options to Turbocharge Your Returns
For many investors, options are scary. These investors have heard horror stories about people who got burned trading options, or that they’re complicated, or that they’re not for the little guy.
There are complex options strategies, and people do lose money when they speculate (there are also many investors who make money) with options. Most people who lose money trading options do so because they buy options. In a moment, I’m going to show you how to be the seller, the person who is more often on the winning side of the trade.
The strategy that I’m going to show you is simple, carries no risk to your principal (only opportunity risk), and can boost your returns by double digits annually.
First let’s go over definitions of the two kinds of options: puts and calls.
Put: A contract giving the buyer of the option the right, but not the obligation, to sell stock to the seller of the option at a specified price by a specified date.
Call: A contract giving the buyer of the option the right, but not the obligation, to buy stock from the seller of the option at a specified price by a specified date.
Let’s look at an example.
Shares of Microsoft are trading at $26. An investor buys the January $30 call for $1. This means the call buyer has the right (but not the obligation) to demand the shares of Microsoft at $30 from the call seller at any time between now and the third Friday in January. (Options expire on the third Friday of ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.