Pick up your “call coin”.
If I buy, you sell. If I sell, you buy.
If you buy something, you must have a reason for wanting to buy it, and vice versa for selling something. Now that you are clear what we are doing with the coins that represent the 2 sides to every transaction, we simply need to define the reason for doing so.
I will lay out the simplest reasons for making these decisions here, and you can memorize these 4 things – whether you memorize it visually as fact (like I did in college trig), or you have a full understanding of it, is up to you.
Buy a call in hopes a stock price goes up.
Sell a call in hopes a stock price goes down.
Buy a put in hopes a stock price goes down.
Sell a put in hopes a stock price goes up.
So, you do the exact same things with both the “call coin” and the “put coin”, but for the opposite reason.
When I memorize the action I take separate from the reason for taking that action, they begin to complement each other and come together.
I am reiterating how basic these concepts are at their cores so we can have deeper conversations about our goals and what we are trying to accomplish.
Go take some action! Here is your homework:
- Get approved to trade options on your investing platform
- Buy a call or a put for less than $100 for a trial (buying an option leaves you with no obligation to do anything, only the “option”)
- Watch closely how the contract behaves as the market changes
- Contact me with any questions and feedback about your experience
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