Options 101 - Profit from all conditions

This is a short video to show you how options could be used to protect our stock investments and ensure that we profit from all market conditions.

To learn more, go to www.azizikhalid.com

Category:

Howto & Style

Tags:

• economy
• Investment
• market
• Option
• trading

[conor34040]

Newbie here....Great video.

Can you explain why one wouldnt put a Call and a Put option on the same set of shares? Therefore benefitting from either way the market moves?

Only reason i can think of is placing these put/call options are quite expensive?

Thanks

Conor

[azizikhalid]

I answered your question in my blog azizikhalid(dot)com.

[RandomUser2009]

First: you dont get 1-year PUTs for the current strike at 2 dollars.  You have to at least calculate with 5 dollars, because of the huge time premium! (result: 15K on a 30K-investment is ROI of 50% on options alone in 7 years -> sad!)

Second: if you buy the PUTs NOT at the peaks, but somewhere in the middle, you dont get rich at all. Big loss!

Third: The stock-buy was just for illustrating the outperforming character of options, right? Cause you dont have to own stocks in order to use options!

[rameshjain2009]

It is not easy to get put option of for 2 dollars for one year. This is misleading

[acidentallycool]

i feel like i have waisted my time

[acidentallycool]

Agreed w #RandomUser2009.

Premiums for put options will never stay at 2 or 3 dollars throught 7 years. you are not accounting for the intrinsic value. And you absolutelly do not have to buy stocks.

[nirbhay121]

This is how fools are made to loose money.

[tanmoyroytube]

which software is this (sketch and record voice)? Seems very handy..

[poklzhou]

@poklzhou Let's put it this way, assume people tend to buy more put options after viewing this vid, put option prices goes up, eliminating the profits.But this creates a chance for making money if the prices accelerates out of rationality, resulting in a frenzy.

[poklzhou]

@poklzhou The way to make money is by betting for profits that outweighs the according risk. People can only do this in two ways. 1, By out-predicting the market, either through unfair, private channel of information or personal insights. 2. Buy playing with the brand-new financial products, where most people are still unable to rationally decide the real risks of items being traded.

[poklzhou]

Every time the stock goes down, you are compensated in full, that's where the money is from. I have two points for this. 1. what if the stock is not so volatile , and it never goes down more than 2$ during the period guaranteed by the put option, then put option is decidedly not profitable. 2. for the more volatile stocks, I would imagine buyers issue put options for higher prices accordingly, since the risk for them is greater. And you'll still have to decide what is the reasonable price.

[mrcuboid]

Cut to 0.42

[klabouch900]

so regardless if the market goes down in 7 years you will still profit?

[webguy943]

@RandomUser2009 u kno what ur talking about.. the guy in the video hasnt got a clue. u should make stock videos instead.