Investors often believe that stock market trading is the only way to make money. This is sound thinking when the market is moving upward, but not so beneficial when indices decline. As investors have been shown way too often, the market declines at a far more rapid pace then it ascends.

If you include an option trading strategy, you can earn money whether the market is up or down. In case you are not conversant with options, they allow you to decide whether or not you wish to purchase or unload the shares of a particular stock for a set price within a set period.

This process is not the same as stock market trading. When you deal in options, it is possible to generate profits in either a “bull” or “bear” market. This is accomplished via tools known as “calls” and “puts”. “Calls” are purchased when your research indicates good things about one stock, sector or region. In other words, this is an alternative to buying the stock outright. “Puts” are purchased in the opposite situation.

Any investor can learn from an option tutorial. From this, one will learn first and foremost that options are wasting assets valuable only within strict time limits thus each option has an expiration date. They will also learn the fundamentals such as what is a strike price – which is the price the option sets to buy or sell the underlying stock.

A “call” is a stock purchase option which is sometimes helpful. It gives a buyer the right to purchase a stock at a determined price in the future. The buyer pays a premium ( from one cent to hundred of dollars) for this option.

This means that if you buy the Stock XYX January $10 Calls, you are betting that on or before the January expiration day (the third Friday of the month), shares of XYZ will be trading for more than $10, which means that your call option gives you the right to buy shares at a discount.

Conversely, with a put, you pay a premium for the right to sell a stock at a set price, regardless of that stock’s actual price in the future. Should you buy the XYZ January $10 Puts, you are betting that on or before the January expiration day, shares of XYZ will be trading below $10, which means you can sell XYX at $10 for a profit.

An option trading strategy requires less money to start than does stock market trading. However it does require some knowledge but it also allows you to profit in any market. Unlike stock investing, especially buy and hold strategies, volatility is the markets is often welcome.

Most people have heard of stock market trading. For the most part, if the market goes up you make money and if it goes down you loose money. There is an alternative. It is called options trading. This type of trading is more focused on a particular stock. Take an option tutorial to better understand the nuances of the trading. This will help you develop an option trading strategy. For some, this type of trading is more enjoyable since you are researching a particular stock as opposed to just playing the market.

- David Baxwell