We have come a long way now both on the 40 different ways of making money online, and in this section on online trading. Now we are in Options, and there are different types of options. I will introduce you to all of them but concentrate on binary options which started in 2008.
In my article on 'summarising 8 years of Forex trading', I introduced binary options to you telling you of how I turned $510 into $4000 in 1 week but threw most of it back. I used that to whet your appetite ahead. I hope you watched the video.
Actually, I have been seeing Binary Options since 2010, but I never bothered about it until I started the research on the different ways of making money online this year. And I must confess, it blows my mind away. If there is another thing like what the Yorubas will call 'Ogun Owo' (blood money/free money/awoof money), it is binary options.
I will use this outline for the articles in this section of online trading:
- What are Options?
- What is 'Binary Options' and why should I consider it?
- Reviewing the acclaimed 'best and most profitable' binary options robot/signal in the world presently (I will devote a whole article to Binary App 810)
- How to make money in binary options without throwing it all back -Strategies for successful trading
- Beware of scam binary options signal/robots
Ok, let's begin....
What are Options?
An Options is a contract which gives the buyer (the owner) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified price (the strike price) on or before a specified date.
A person who owns options doesn't actually own anything except the contract which gives them the OPTION to buy or sell something at an agreed price, by some agreed time in the future.
For example, let's say you enter a boutique in Yaba and tell the shop owner that you like a particular shirt presently sold at N1,800 ($10) but you want to buy it in 2 weeks time/end of the year @ say N1,500 or any price less than N1,800, because you believe it will be cheaper by then due to less demand (as Christmas will have passed). Then you will give the seller/owner of the boutique a premium amount (i.e. deposit) of maybe N1,000. The 'strike price' is the N1,800 it costs today. If before that time or exactly by then, the price of the shirt comes to say N1,200, then you can exercise that RIGHT and buy the shirt for N1,200, gaining N600 off the price today.
[This is a PUT option because you believe the price will come down.]
But if in 2 weeks time, the price had gone up instead, to N1,900, then you will either pay N1,900 for the shirt (i.e add N900) or lose your deposit/premium amount of N1,000.
Options Trading Mastery is a very good website to learn more.
Types
- Stock market/CFDs/index options
- Forex market/Binary options
- Commodity Futures
In stock market, some traders use it to hedge (i.e BUY and SELL a stock at the same time). For example, you already have 100 units of Dangote Cement shares and then you enter into an option contract to sell Dangote Cement shares at N180 ($1) Put in 1 month (because you believe the price will go down by then), this gives you the right to sell 100 shares of Dangote Cement after you pay the premium.
If the shares fall as you predicted, to N100 in one month, and you want to exercise the option, you can purchase 100 shares of Dangote Cement for N100 in the market and then sell the shares to the option's writer for N180 each, which means you make N8,000 (100 x (N180-N100)) on the put option, less the premium anyway. THIS IS HEDGING.
But if the shares rise to say, N200, then you will either have to still sell to the person @ N200 losing N20 per share, or give up your premium.
I have given you two 'Nigerian' examples to explain options. I hope you understand it now.
What is 'Binary Options' and why should I consider it?
Whenever I explain binary options, I use this example: It is the intermediary between Sports betting and Forex. What do I mean?
In sports betting say Football/soccer, you bet on a team winning, say Barcelona defeating Real Madrid by the end of 90 minutes. In Forex, you buy or sell currency pairs based on whether or not you think the price will go up or down.
Binary options simply is betting on the price of a currency pair, or commodity or stock market index, going up (CALL), or going down (PUT) before a specified period of time.
So imagine combining the returns of sports betting (up to 400% in one trade) with the charts and pairs and leverage of the Forex market, the result is 'Ogun Owo' (lol)- so much money to be made, (and of course, you can lose too).
And that is why John 'the insider' Callaghan of the video I shared in the other post could turn $500 into over $90,000, $135,000 and $140,000 at three different competitions. Now that is not to mean that you can't lose all your money oh. [Join me in my next article as I review the Binary app 810, the current online buzz in the binary options world.]
I will also tell you more (I mentioned him in an earlier post) about Roy Tribble and his Super Signal System (though I have not used that one yet), but he also has made over $200,000 in about 4 months with it. You can check up his site Scam Watchdog ahead.
See you soon.
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