Options trading. Learn to trade options. In this video I'm going to give you a quick introduction on how to
consistently make money in the stock market by options trading. What a lot of people do is
they think that they have to buy low and sell high so we're gonna use Facebook as
an example they think that they can buy Facebook let's say a $195
and then they're just going to guess and then maybe they'll sell it at
$230 they have no idea what price to sell it at and if Facebook goes down
to a hundred and eighty then they're probably psychologically going to just
keep it and hope that it goes up the probability that you're gonna make money
by buying Facebook I know is trading right now at around $210
dollars uh you know let's say $210 and then sell it at a higher
price is probably around 52% and on average you're probably
going to earn around 7% a year before taxes what a lot of other
people try to do when they get more aggressive because they listen to all of
these fake gurus who tell them that they can't earn $10,000 dollars into
like $10 million is they day trade and they think that they are able to predict
the price action by listening or by identifying like three charts that is so
funny to me because of someone who graduated from one of the best schools
in the world and worked as an investment banker for five or six years and has 20
years of experience it's funny how marketers can prey on
innocent people and use fake social proof and fake reviews and create entire
fake websites in order to convince people that they should a trade because
when you day trade not only are you not going to turn ten thousand dollars into
ten million but you're not even gonna make money you're gonna lose all your
money but with a lot of these people do is
they think that they can take a random chart and that they're gonna be able to
sell right here buy right here sell right here by right here there's no
way possible that you're gonna do that but obviously a lot of you guys don't
believe me everyone thinks that they're special and you guys think that you're
gonna be able to call the highs and the lows of the market and that you're gonna
be able to turn ten thousands of ten million if you're able to do that please
send me your full training statement from a legitimate broker and sending a
screen recording that shows your entire transaction history okay right now I'm
going to show you how to really make money in the stock market so the way
that we make money in the stock market is by selling insurance let's say
Facebook is trading at two hundred and ten dollars a share I can receive money
for agreeing to buy facebook at a hundred and ninety okay so what this is
is this is called a strike price and by agreeing to buy facebook at a hundred
and ninety dollars a share I can get paid around $1 per share and I can sell
one contract one contract is equal to 100 shares so when I agree to buy
Facebook at a hundred and ninety dollars a share even though it's currently
trading at two hundred and ten dollars I can collect one hundred dollars because
one dollar share and one contract is 100 shares now the other thing that this has
it as it has an expiration date so remember the way to consistently make
money in the stock market is by collecting premium and by selling
insurance so let's say I decide to agree to buy facebook at a price of a hundred
and ninety and I agree that I'm on the hook to buy facebook at 190 for three
weeks this contract for three weeks of being forced to buy facebook at the
falls for one ninety from its current 210 will pay me let's say $1 a share if
I agree to be on the hook to buy Facebook at 190 instead of three weeks
for six weeks
then maybe I get paid two dollars and 20 cents a share as a result if I get paid
two dollars and 20 cents per share for every contract that I sell I collect two
hundred and twenty dollars so in this example if Facebook falls down to a
hundred and ninety my net break-even cost for this six week put option is
actually going to be one hundred and eighty seven dollars and eighty cents
which is the hundred and ninety dollars strike price less than two dollars and
twenty cents so what I'm doing is I'm obligating myself to buy Facebook at a
hundred and ninety dollars even though it's currently trading at two hundred
and ten dollars and because I'm collecting two dollars and twenty cents
my net cost in the worst case scenario is that I will have to buy Facebook at a
price of one hundred eighty seven dollars and eighty cents now ninety five
out of a hundred times Facebook is going to stay above a
hundred and ninety dollars so what happens in this situation when Facebook
stays above a hundred and ninety dollars in three weeks or six weeks time I keep
my entire premium it's just like if you buy car insurance for a six month policy
and you don't have any accidents you then pay again through to your insurance
company so that you're insured for another six months or for another a year
so in this situation we are the insurer salesman and we collect money from the
person who buys our put option and after six months just like with the car
insurance if there are no accidents we get paid again if you decide to insure
your car for a year and you don't have any accidents then you pay us again and
we collect that insurance but this is even better than selling car insurance
because in this situation we collect and keep the entire premium ninety-five
percent of the time when you sell car insurance there's probably a claim on
every six or seven no there's probably a claim on around three or four of the
claims every single year so they probably keep the full insurance around
sixty five percent of the time and thirty five percent of the time there's
they have to pay out money because there's been an accident so this is how
professionals make money in the stock market
pretty much professionals make money in stock market in two ways and really only
two ways the first is there a market maker so you have like Goldman Sachs
they buy large chunks and large quantities of shares directly from the
exchanges and then they profit like 0.5 or 1/2 of 1% 50 basis points for making
markets they don't take directional risk or they don't take they don't have a
directional bias and so what they do is there are just a broker they profit from
the bid-ask spread differential that's the first way that professionals make
money the second way that professionals make money is they sell option premium
that's pretty much it right like that's it those are the only two things that
give you a statistical advantage in how to consistently make money in the stock
market so I'm gonna create more videos like this and explanations and tutorials
and if you have any questions you can go to the BestStockStrategy.com and sign
up and receive $400 in free training I also provide trade alerts to all of my
subscribers, every single one subscribers, makes money this isn't a
get-rich-quick scheme where you're going to turn $10,000 into $10 million because
all of those guys who tell you that they do that are all frauds make sure that
before you follow fake gurus that you always ask for full trading statements
and screen recordings of their entire transaction history and remember that
the only way to make money in the stock market for retail traders is to sell
option premium and you should always think long term so that you can hit
singles you're not going to get rich overnight but if you consistently work
on yourself put out content work hard and hit singles and profit consistently
then it doesn't matter if you're making $10,000 or $15,000 in one year because 5
years from now you can turn that $10,000 or $15,000 into $200,000
or $500,000 so don't judge yourself
too harshly by where you are right now do not give in to the mentality or the
pressure that you have to make quick money because real wealth is built by
sacrifice so you can pay the price today so that way you can pay any price in the
future once again this is David Jaffee with BestStockStrategy.com and if you
have any questions let me know and I'm here to help thank you