When I first heard about options
trading, I thought it was something only financial geniuses could master. Words
like “Delta” and “strike price” sounded intimidating, and I wasn’t sure where
to start. But let me tell you this: you don’t need to be a Wall Street expert
to succeed in options trading. I started with just $37 and grew it into over
$100,000 by following a simple, disciplined approach.
Today, I’m here to share exactly
how I did it and how you can, too. Options trading has changed my life, not
just financially, but also by giving me confidence and freedom. Whether you’re
looking to make a side income or create a full-time career, options trading is
a powerful way to grow your wealth. Let’s break it down step by step so you can
start your journey today.
What is Options Trading?
Options trading allows you to
profit from the movement of stocks without owning the actual shares. Think of
an options contract as a box that holds 100 shares of a stock. When you
trade options, you’re essentially renting these shares temporarily, with the
opportunity to profit based on how the stock’s price moves.
Key Terms You Need to Know:
- Call Option:
- You profit if the stock price goes up.
- Think of “calling” someone—pick up the phone,
price goes up.
- Put Option:
- You profit if the stock price goes down.
- Think of “putting” the phone down—price goes down.
- Strike Price:
- The price at which you have the right to buy
(call) or sell (put) the stock.
- Expiration Date:
- The date by which you must decide to sell,
exercise, or let the contract expire.
Why Trade Options Instead of
Stocks?
- Lower Cost: You can control 100 shares with
just a small investment.
- Flexibility: Profit whether the stock goes
up or down.
- Scalability: Start small and grow as you
gain confidence.
How Options Work - A Simple Analogy
Imagine you want to buy a car, but
you’re not ready to commit. Instead, you pay a small fee to reserve the option
to buy it later. If the car’s price goes up, you profit because you locked in a
lower price. If the price goes down, you lose only the fee.
Options trading works the same way.
You’re paying for the “right” to control 100 shares without fully committing to
buying them outright.
Getting Started with Options Trading
Step 1: Choose Your Platform
Before you can start trading,
you’ll need a brokerage account. Popular platforms like Robinhood, Webull, and
TD Ameritrade make it easy to trade options.
Step 2: Learn the Basics
It’s crucial to understand the
foundational concepts:
- Calls and puts.
- Strike price and expiration dates.
- How to calculate profit potential.
Step 3: Start Small
When I began, I started with just
$37 because it was an amount I could afford to lose. Start small and treat it
as a learning experience.
Key Strategies for Beginners
Options trading might seem complex
at first, but success comes from mastering a few simple strategies. Here are
the ones that worked for me:
1. Calls & Puts - The Core of
Options Trading
- Call Option Example:
Let’s say a stock is currently trading at $100. You buy a call option with a strike price of $105, expecting the stock to go up. If the stock rises to $110, you profit from the increase. - Put Option Example:
If the same stock is expected to drop to $90, you buy a put option with a strike price of $95. As the stock price falls, you profit from the decline.
2. In the Money vs. Out of the
Money
- In the Money (ITM):
- The stock’s price has already passed the strike
price.
- Example: A $100 call option is ITM if the stock is
trading at $105.
- Out of the Money (OTM):
- The stock’s price hasn’t yet reached the strike
price.
- Example: A $100 call option is OTM if the stock is
trading at $95.
ITM options are generally safer but
more expensive, while OTM options are cheaper but riskier.
3. The Greeks - Understanding How
Options Move
The Greeks help you predict how
your option’s value will change:
- Delta: The amount you earn or lose per $1
move in the stock price.
- Theta: The amount you lose daily as the
option nears expiration.
- Gamma: How much Delta changes with each $1
move in the stock.
Example:
- Delta = $45, Theta = $40.
- If the stock moves up $1 in a day, you earn $45 but
lose $40 due to Theta. Your net gain is $5.
4. Volume & Open Interest
- Volume: The number of contracts traded in a
day.
- Open Interest: The number of contracts
currently held by traders.
High volume and open interest
indicate strong activity and liquidity, making it easier to enter and exit
trades.
My Go-To Options Strategies
- Gap & Go
- Occurs when a stock opens higher than its previous
close.
- Use a call option to profit from the upward
momentum.
- Dip & Rip
- Happens when a stock opens lower but quickly
reverses upward.
- Use a call option to capitalize on the bounce.
- Double Tops & Double Bottoms
- Double Top: A stock hits the same high twice,
signaling a reversal.
- Double Bottom: A stock hits the same low twice,
indicating a bounce upward.
How I Turned $37 into $16,000
Here’s an example of a successful
trade that highlights the power of options:
- The Setup:
- A friend bought 100 contracts of BBIG at $1 each,
spending $100.
- The Outcome:
- The stock price surged, making each contract worth
$130.
- Total profit: $16,000 in a single day.
This trade shows how small investments can lead to big gains with options.
My Final Thoughts
Options trading isn’t as
complicated as it seems. By mastering the basics and focusing on simple, proven
strategies, you can start building consistent profits. Whether you’re starting
with $37 or $370, the key is to stay disciplined, patient, and always be
willing to learn.
If I could turn a small investment
into a life-changing income, so can you. Now it’s your turn to take the first
step toward financial freedom with options trading. Let’s make it happen!