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Options
Anyone experienced in the equity markets knows that buying options (calls or puts) is a long shot. I believe that the statistics show that 80% of those buying options will lose money. When I look at my own personal trading records I see that the bulk of my trading losses occurred through option buying. That being the case, why did I do it? Probably the same reason everyone does it; the lure of easy money without risking a big stake. In reality, the smart money is selling those calls and puts. That’s where the real money is made. They make it in very small increments, just nickels and dimes, but they make it consistently. After awhile, those nickels and dimes add up. Before you know it, they’ve made some real money! This strategy is known as covered call writing and it is considered relatively conservative. As with any investment strategy, you should discuss your goals, objectives, risk tolerance, and financial situation with a qualified financial advisor specializing in option trading.
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