In today's era, it is everybody's dream to generate some easy and extra income by investing money somewhere. After the internet revolution, it has become far easier than ever to earn some extra and passive income siting in the bedroom. About one and half year back I learned about Option Trading in share market. Since then, I am doing it regularly. Though trading in derivative market is a high risk affair but if you get involved in it to earn a reasonable return every month, you can fulfil your desire to earn easy money.
There are two part of option trading, option buying and option selling. Here I will try to explain about both as per my understanding.
In today's era, it is everybody's dream to generate some easy and extra income by investing money somewhere. After the internet revolution, it has become far easier than ever to earn some extra and passive income siting in the bedroom. About one and half year back I learned about Option Trading in share market. Since then, I am doing it regularly. Though trading in derivative market is a high risk affair but if you get involved in it to earn a reasonable return every month, you can fulfil your desire to earn easy money.
There are two part of option trading, option buying and option selling. Further there are two types, put and call, this total 4 types of options. Here I will try to explain about both as per my understanding.
These are derivative products of any stock/indices, traded on the basis of speculation. They are used to hedging against volatility of underlying stock/asset/index.
My favourite is Cal option selling. Although as mention above in such trade profit is limited and loss is unlimited, but I used it in combination with holding of any particular stock. Below is the example -
The above trading is 100% safe, but for that, selection of stock is very important. I selected the stock which is in continuous uptrend from last 20 years. Thus, the premium I am earning every month by selling options is an extra income other than appreciation of stock price.
In last one and half year of my option selling only one time, share price went above my option price, otherwise I am always in profit in option selling.
It requires high investment, but a good way to earn something on shares you hold. Figures show that option seller's winning rate is above 80% because in option selling time is in your favour as time passes premium evaporated and on the expiry it becomes 0.
Selling a call/put option without hedging is a high risk affair and should be done with strict stop loss.
Buying an option required low investment, but chances of losing your investment is very high until and unless you square off your position in profit.
What ever I mention above is not a financial advice and written on my personal experience. One must do his/her own research before any investment.
