 What's up everyone? My name is Alex. I'm one of the co-founders of MyInvestingClub.com and I want to let you guys know about something special we're doing for our viewers on YouTube. So the most common question we get asked is, you know, how do I start day trading? So what me and my mentor about it is we create a free two-hour mentorship course for the brand new trader. It's going to be available at MyInvestingClub.co. The link is going to be right here. This is a free webinar that reveals our 12 secrets that every single brand new day trader should know before they start. I also want to let you guys know about something that's very unique to MIC. So if you have any questions about trading or you're curious about trading or you don't know if MIC is the right fit for you, now you can text our head mentor, Tash, whose number is going to be right here and he'll answer all the questions that you have in less than 24 hours. Thank you and enjoy the video. All right. June 7th, June. Wow. Okay. That's a way to start off the recording is tell the wrong date, July 7th. What date? What year is this? I don't know. Oh my God. I do know that Charlie Daniels just died yesterday and that's the saddest shit I think I've heard outside of COVID. So yeah, 2020, anytime you're ready to stop, now's a good time. Alrighty. So options basics presented by MyInvestingClub, but before we go any further, folks, let's take a moment to read this disclaimer. So type of accounts needed, all right? First is all you need is a cash account. Okay. This is the recommended. You don't need a margin account. You don't need anything else. A minimum account at most brokers, I believe, is like 500 bucks. So really all you need is a $500 cash account and you can trade options. You shouldn't be loading your account with thousands and thousands and thousands of dollars in the very beginning of your options career because you're probably going to lose it all very quickly, trust me. Very fast. It will be gone like the wind, okay? Like a fart in the wind. So benefits of a cash account is you get to avoid PDT and the reason why trading a cash account with options is it is only a T plus one settlement. Now remember, you will need options level to approval in order to trade most of these strategies. When you fill out your application with your brokers, whoever that may be, we have some suggested brokers coming up in a moment. But what T plus one means is whatever day, let's say today, okay? Most cash accounts are T plus three. Margin accounts allow you to trade on borrowed money while stocks are settling in the background. Stock is always T plus three. But using a margin account allows you to trade freely at all times as long as you're within your margin. But a cash account requires a T plus one settlement. So that means that if I trade, if I buy $500 worth of options today, I can't use that $500 tomorrow. I can use it the next day, okay? T plus one trading day and then it's ready to go, okay? Oh, I was just informed from Bow that stocks went from T plus three to now T plus two. So regardless, stocks are still a longer settlement date. And so that's why trading a cash account is much more difficult in avoiding PDT and stuff like that. Plus in stocks, you can't short sell in a cash account, whereas if you use a cash account and you buy put options, which we will get to, it's virtually short selling without borrowing shares, okay? You're betting the price goes down and when it goes down, you make money. Same as shorting, but there is actual managed risk. So margin accounts are not required here in this case and the only reason why you would ever need a margin account in this case is if you don't have, let's say, I'm just not going to recommend it. I'm not going to recommend it because I know some of you are going to go out there and you're going to think that you can do this. You're going to think that you have the ability to short calls and short puts, okay? I will explain what calls and puts are and everything like that and options and thus forth, but you think you have the ability to do this. Trust me, right now at your level of options understanding, 90% of you don't have this ability. 90% of you don't have the stones needed to be able to do this, nor do most of you have the equity in your account to do this. It is literally short selling overnight on steroids, okay? Imagine you're short a penny stock at five. Over nine it goes to like eight or maybe 10. I don't know. Let's say, let's say it is five bucks now and you're short. Over nine it goes to eight, right? You're down, what is that, 70%, you're down 70% on your position, okay? If a stock goes from five to eight overnight, the stock, the options are going to go from like five to 15. It's leveraged like never before, okay? And it will blow you up so fast and you will owe the broker money and you will have collectors, debt collectors calling you. There's going to be judgments on your credit. There's going to be all kinds of stuff, okay? Just don't sell first, okay? For the purposes of all of this, do not short calls. Do not short puts in the beginning, okay? As you continue, if you want to learn strategies to where you could do this and manage your risk, more power to you. Don't do it in the beginning. It is not at all what we are going to be doing in this series, okay? We're not going to be talking about advanced strategies. So if you're here to hear, if you are here to hear, de-de-de, beauties of the English language, one word with the same sound meaning two different things. If you are here to hear about the advanced strategies of options, no. That is not what we're here for, so not going to happen, sorry. All right. So let's talk about brokers. Who we recommend? First off, we recommend Cobra and Venom Trading, both of which are preferred brokers. However, some secondary options to that are going to be Tasty Trade, which is entirely tailored to options trading. And single-handedly, I will say this, full disclosure out of all four of these brokers, Tasty Trade, best platform. Reason why is probably because Tasty Trade developers were the developers of Thinkorswim, okay? So it is hands down the best platform for options trading. It is the absolute best. However, Cobra trading is the best pricing. Venom is not bad as well. E-Trade not bad as well, all right? Those are the four brokers we recommend. Cobra and Venom, you will get a discount through MIC, and Tasty Trade and E-Trade, we have no affiliations. I'm not going to not recognize a good broker when you see one, so you have to, I have to say it just based on principle, I'm not going to lie to you. All right, so let's talk about why we trade options, okay? Why trade an option? Why do I even want to do this? Why don't I just keep trading stock? Well, the reality is you have additional leverage, lower cost necessary to trade, less risk, okay? Yeah, believe that folks, less risk when you trade it correctly, okay? There is less risk exposure in options versus stock. I know, I know, sounds funny, sounds funny, but it's true, okay? And you have higher potential returns, all right? Higher potential returns on lower cost with less risk. Okay, well, all right, you have my attention. So now that we know why we want to trade these types of things, let's walk through what actually is an option, okay? There are two types that were created as an insurance or a hedge against stock, okay? Originally where they were created, but you can trade them individually and profit from that, okay? The first is a call, all right? This means you are long or you are bullish on the underlying, otherwise known as stock. So when you hear someone say the underlying, they're talking about the stock price, the actual stock price, Amazon is trading at $2,500, okay? That is the underlying. If the stock is trading at $2,500 and the calls are trading at $20, then the underlying at $2,500, the calls at $20, there's your difference, all right? The underlying price of the stock, the underlying drives the price of the option. It's not tick for tick, all right? It's not tick for tick, but the movement of the underlying stock drives the price of the option. Puts are shorts or you are short or bearish on the underlying. So it's going to be very confusing at first, but when you buy a put, okay? Sounds like an oxymoron, but buying puts means that you want the stock to go down. When the stock goes down, the value of your put increases. So it's basically like going long all the time in your mind, except calls of puts. That is just simply directionally how it works. Our focus will be on the buying side of options only for this entire series, okay? For this entire little boot camp, it is only going to be focused on the buying side of options. So directional trading is what you call this, simple directional trading. We are only buying calls if we want to go long and we are buying puts if we want to go short. We are not selling calls. We are not shorting calls when we want to go short and we are not shorting puts when we want to go long, okay? We are not exposing ourselves to that much risk without hedging it in another way. So don't expose yourself in that way, okay? And here we go again. I know somebody is going to ask this. I know somebody is going to ask this. Can we short the calls too? Can we short the puts too? Hey, bruh. You know, it's talking about looking at the strategy and stuff happens like, you know, maybe I should like short this. It's like, it feels like the premium is like way too much. I can just hear it. It's coming. I know it's coming, all right? But I'm going to stop you there, all right? It's not what we're going to talk about. Yes, you can, but it is shorting on steroids, okay? It is unlimited potential losses on a leveraged instrument, okay? Don't do it. Okay, okay. Folks, I got a big brain. I'm telling you, I got a big brain. I'm not a lot of people. Don't do it. I'm just kidding. Don't do it. All right, guys. We'll see you later. Have a good one. Thank you so much for watching our video. If you want to see more of our videos, please subscribe to our YouTube channel by clicking the button here. We do our best to post a new video every single day. If you have any questions about MIC or any general trade questions, please text us using the number here. Also, stay up to date by watching some of our most recent videos right over here.