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Investment Methods that were YEARS ahead of their time; still work, January 27, 2011
This review is from: How to trade, put, and call options: The new and proven way to stock market profits (Hardcover)
Under normal circumstances when one buys a stock, the investor makes no profit in two out of three possible occurrences - (1) when the price of the stock goes down; (2) when the price of the stock remains the same.
The investor only profits if the stock increases in price.
However, selling options on stock owned or purchased makes it possible for the investor to earn handsome annual rates of return, frequently 40% or more!
Unlike regular stock purchases where a profit is possible only if the price of the stock increases, options make it possible to make a profit even if the stock remains at the purchase price or if it increases in price.
For more venturesome investors, annualized rates of return of 100% or more are possible under bearish market conditions by selling "naked options" (without actually buing or short selling any stock). In this instance the invstor can realize a profit if the price of the stock remains the same or declines.
The author covers the risks as well as the rewards of trading in options.
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