Prepaid Trading - I

They say "Option trading is for the experienced traders only."

They say "Never trade naked options!"

The above statements are true lies!

True, because Options are more difficult to understand as compared to futures or Cash trading.

Lie, because these are more useful to inexperienced traders than experienced ones!

True, because naked options used recklessly are the fastest road to bankruptcy.

Lie, because hedged options are slow poison, and naked options, if used with caution, can be the shortest road to prosperity!

By not opting for the option of options

a new trader may miss out on the best feature of the option....

..........unlimited profit, limited loss!

Options became untouchables

when people who didn't read the "operational manual" of Options

started playing with it recklessly

and lost heavily!

They started saying

"my loss was limited...........to 100% of my premium!"

Onlookers believed all this over and above their perception that options were difficult to understand.

Thus, one of the most powerful and safe tools of trading became

"Only For Us"

for the select few!

Options are truely "unlimited profit, limited loss" provided you have read their "operational manual" (the do's and don'ts).

Those who have read it, know that trading with options is

....pre-paid trading, just like a pre-paid mobile!

Benefit of pre-paid mobile over post-paid is that in pre-paid you can control and limit your cost.

Similarly, option trading is a pre-paid trading wherein you can control and limit your loss

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Your technical indicators tell you that something is likely to happen in a particular direction.

You want to take the chance

but fear that your analyses may be wrong and you may lose money

or

you may be reasonably sure but fear of losing may simply make you a stone

like Arjun in Mahabharta!

Consequently, you opt out of the trade

only to see the trade eventually go your way....

....sans you!

On the other hand, if you knew options trading

you can buy a cheap "out-of-money" option and enter the trade!

If the trade goes the way suggested by your technical analyses

then you will double, tripple, quadruple your amount the fastest!

Otherwise, you lose a part of your small investment.

How much you lose depends upon how wrong your analyses went!

The loss because of analyses gone wrong, anyway, will be much lesser than when you would have invested in futures!

A naked option is the best way to learn with least money!

And it is also the fastest way to make a fortune!

You think you can't make a fortune by cheap "out-of-money" options?

I shall be sharing a few simple methods in the sequel to this article!

Keep watching this space!!!