| For a few hundred in commissions, you could turn | | | | opens and starts selling off quickly. Before long, the |
| $1000 into $40,000 in an hour or so by trading stock | | | | QQQQ is getting close to $39, and the call option |
| options...at home on your computer through your | | | | written at 40 (that expires shortly) is trading at $.05. |
| discount broker. With $40,000 to play with you are | | | | A news alert comes over your TV...its great financial |
| on your way to making some real money. But pay | | | | news! You quickly place a buy order for 200 |
| attention, you will not be able to do this very often. | | | | contracts of the QQQQ 40 calls at $.05, for an |
| This opportunity is most likely to be found on the | | | | investment of $1000. Your order is executed, and |
| third Friday of the month, since stock options expire | | | | within an hour QQQQ is trading at $42, with the |
| the following day. You will be playing | | | | stock market soaring. Your options are trading at $2, |
| out-of-the-money options with only a few hours or | | | | and you sell. |
| minutes of life remaining on them. Your objective is | | | | You have just sold 200 contracts worth $200 each, |
| to get in at $.05 (or less) and out at $2 (or more). | | | | and put $40,000 into your brokerage account. |
| This is not likely, you are speculating. But it is possible, | | | | Now, if there is anything you did not understand in |
| and the most you can lose is your investment of | | | | the above scenario, you are not yet ready to trade |
| $1000 and a couple hundred in commissions. | | | | stock options. I started playing this game when I |
| Here's the scenario... | | | | was a stock broker in 1973, when the game of |
| It's Friday morning, the third Friday of the month. | | | | trading stock options first started on the CBOE. |
| You are at your computer on your discount broker's | | | | The vast majority of trades like we just made end |
| web site with your stock streamer on. In the | | | | up as total losses. You're not playing horseshoes |
| background you have the financial news on TV, so | | | | here, there is no room for error. Stock options offer |
| you can hear it. | | | | great leverage, but trading them with success |
| In the past few days the stock market has taken a | | | | requires you overcome two obstacles not associated |
| severe beating on bad economic news. Any good | | | | with trading stocks. First, commissions are much |
| news at this point could send stocks soaring. Your | | | | higher. Second, to make a big hit you need to play |
| focus is on stock symbol (QQQQ), an ETF that | | | | out-of-the-money options with no real or intrinsic |
| basically tracks the NASDAQ stock market, which | | | | value. Their price is based on time and opportunity |
| has been falling like a rock the past few days. You | | | | for profits, and as expiration approaches their price |
| are also focused on the QQQQ out-of-the-money call | | | | (premium) melts. |
| options that expire tomorrow. Why? Because they | | | | If you are new to day trading, stick with stocks, or |
| should be selling for pennies, they have heavy trading | | | | ETFs like the QQQQ. You won't get leverage, but |
| volume, and they offer maximum leverage. | | | | you won't be playing a long shot, either. |
| QQQQ closed yesterday at $40. The stock market | | | | |