Naked News

Let's be clear on this. There is no other option trading strategy can equal or even surpass the income generating potential of sport to write naked options. The term "sport" here, because those who practice this money making trading technique used not only turn out fabulous profits but also a lot of fun in the process. It is a fun, profitable but dangerous option trading sports, especially of experienced and skilled option players is played. That is, until the sportDanger's been with the use of trading techniques which, while offering substantial safeguards to the player, yet still offer high profitability ratios when tamed in slightly reduced prices. Since it was "the investor is safe," only slightly changed the profit potential of writing naked and certainly, without doubt, continue to the premiere money making trading strategy in the options market.

The birth of the options market in recent decades spawned the creation of dozens ofTrading strategies and systems that is used today not only by individual options traders, but also from financial institutions. Share options as an investment instrument is now widely used as a safe and healthy monetary strategy. The ability of options give investors a wide range of choices in stock market investment is what has the options market grow by leaps and bounds in the last two or three decades. There are dozens of option trading systems, from individual employeesInvestors and financial institutions. Each system is designed to achieve a specific investment objective. A financial institution may use long put options to their profits in stocks that have appreciated in hedge value, another investor may buy call options instead of stocks to a position in a security that his imagination was caught in force. Still another may sell calls against his stock holdings to income from his stock position, or what is generating now popularly known as "covered call knownwriting.

Trading strategies, techniques and systems available to the option traders are so numerous that it is today to take a whole book to describe, and that everyone wants a short description are no detailed explanations. It would go far beyond the scope of what we could in this short article to cover. Most strategies are based on the principle of buying calls and puts or obtained, variations of this strategy as the use of spreads. The reason for the popularity of buying calls and putsand its variations is quite simple, limited or defined loss against the potential for unlimited and fabulous profits. This is what has driven thousands into the options trading game. But like everything in life there is always a trade-off. While the potential for fabulous profits against limited investment exists the reality of achieving such success is limited. It is almost like buying a lottery ticket, the potential for attracting mythical wealth. Or, in other words, it is alsoThere used to go to a casino and bet on table games with the hope that at the end of the evening you will come with more money than you, as we all know, it came in only a few winners in casinos and that is why the gaming business offers enormous profits for operators.

But one can be an option, and professionals in a similar position as the casino operator. How? As an option writer or seller instead of a buyer. For each option that is purchased on the market aremust be a seller or writer of the option. These writers are the casinos in the options business. As a seller of the option, take the opportunity to place bets from the purchasers and, since 75-80 percent of all options expire worthless on the market you to the seller pocket the premiums paid by the buyers when the options expire worthless, they bought. For the benefit of those who are not familiar with casinos, the odds of casino betting on the player, only about 5 percent, but RakeBenefits of the transaction. Now imagine this, research and studies have shown that the option writer (seller) is better than 10-20 percent disagree about the option buyer.

Option traders who successfully use the strategy of selling options consider themselves to have found, as the Holy Grail of Investments. And all the variations in the choice of selling strategies (as many as in the purchase option), writing naked options shall be as the Cadillac division. No otherOption selling system offers the profit potential of the naked writer.

So, why is there not more writers on the market?

For two reasons:

1st It is the general belief that writing options carries the potential for unlimited losses. This has served to scare away the thousands of novice traders and those who are not long enough for traders to take advantage of the option in writing and acknowledge the many additional safeguards that conquers this so-calledRisk.

2nd For many with options trading has large profits quickly synonym of small investments. Option sellers, on the other side, have not the potential for outrageous profits from a single trade, and not through a get-rich-quick proposition is less popular, professional and looking for big returns on their investments in small.

It must be noted, however, that option writing is fast gaining popularity among serious investors grow their wealth in asteady, consistent and secure manner regardless of market or economic conditions. For those willing to venture into this lucrative field for a long-term capital growth do not be the first reason to scare you into inaction above. There are many ways to protect themselves and conquer, the element of "unlimited losses" in selling naked can. A successful naked option writer is at risk from an e-book detailing a trading system called, of a three-pronged strategy, the so Trouncethe loss of almost negligible.

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