Financial Literacy

Your One-Step Options Guide

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Two weeks ago, we asked Wealthy Retirement readers for a very special favor…

We asked you to share your story – including how Wealthy Retirement has helped you move closer toward your retirement goals and how we can continue to support you.

Madeline S. appreciates Chief Income Strategist Marc Lichtenfeld’s advice and wrote…

Simple easy to understand writing that demystifies and explains financial instruments and strategies.

As a medical professional… I strive to make [information] simple and accessible even to folks with English as a second language, so I very much appreciate financial writers doing the same for me, and Marc definitely does this well.

And Sean S. remarked that…

Your different analysts give good insights into many parts of the market that I have not gotten in other places. Plus, I use Marc’s dividend strategy now as my main investment thesis.

But in asking for your feedback, we also wanted to learn how Wealthy Retirement can help you stretch one step further toward achieving satisfaction in your golden years.

What we learned was encouraging…

Despite all of the twists and flips this roller coaster of a market has taken investors on over the past several months…

Our readers are more dedicated than ever to generating income and building a wealthy retirement.

In fact, they’re ready to take things up a notch.

So in honor of the readers who expressed interest in learning about options strategies, this week’s State of the Market video is dedicated to sharing Marc’s most commonly used tricks of the trade.

Getting Serious About Income Generation

Options trading can be a high-powered way to earn capital gains and supplement your investment income.

However, it’s very important to understand your rights and obligations well before getting started.

First, note that all options are bets that a given security, fund or other entity (like the volatility index, or VXX), will move higher or lower.

These bets are expressed in terms of “contracts.” A contract represents a way to control 100 shares of stock at one time.

So, as Marc shares in this week’s video, an investor who executes an options trade betting that Qualcomm (Nasdaq: QCOM) will move higher will buy one call contract that enables (but does not require) them to buy 100 shares at the price they expect the stock to reach.

(This price is called the “strike price.”)

Alternatively, an investor who is bearish on Qualcomm can buy a put that increases in value as the stock price declines – regardless of whether or not they own the stock.

You can also claim gains or cut losses on options contracts before their expiration dates, decreasing the likelihood that those options will expire worthless.

Each kind of options trade – buying or selling calls and puts, for example – comes with a unique set of rights and obligations.

(Over the coming weeks in Marc’s State of the Market series, he will cover them all in detail.)

Are You Ready to Take the Next Step?

Because it is more focused on short-term success, options trading does come with more risk…

But rest assured, it is possible to make money using this strategy. In fact, it’s one of the most lucrative ones out there when done properly.

What are you waiting for? If you have been hesitant to dip a toe into this powerful but sometimes volatile investing strategy, consider this your sign to start.

If you’re serious about building a wealthy retirement in a market like this, it may be time to turn up the heat…

Good investing,

Mable


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