How to Use Options As A Trading “Power Tool”

When I was in seventh grade we had a big science project assignment.  I decided I wanted to do a mouse maze to see if mice could be trained to navigate a real-life maze with increasing speed, given various rewards, etc.

Building the maze required cutting a lot of pieces of wood to fairly exact specifications.  My Dad taught me how to measure accurately, mark the wood and make a clean cut with a hand saw.

After an hour, I had about four or five pieces of the maze done – about 35 to go…

My Dad, comfortable with my level of care in using the hand saw, showed me the hand-held electric reciprocating saw.

Used correctly, I could cut ten times as many boards in the same amount.

The problem was that used carelessly, it could make a bad cut or worse yet, could endanger a whole finger…

So Dad took great care in showing me the safety rules and procedures for using the power saw.  After significant training and under his watchful eye, I transitioned to using the much more powerful tool, with fantastic results.

Despite the added risk, Dad showed me how to use a power tool to get the job done fast and safely.  I’d like to re-introduce you to one of our most potent trading power tools today…

I recently put out an options trade idea (QQQ calls) that sprang up 49% within two days and has dropped back to breakeven as I write this. (More on the state of the markets – and your QQQ trade – at the end of this article.) However, many of you are new to options and were having difficulty piecing my instructions together.

Since the “how to” of options trading have not been a recent focus in our articles, I’d like to take some time to do three things:

  • Explain the benefits of options
  • Give you a special look at the “how to’s” of call options, first published in my elite service, Stealth Profits Trader
  • Bust some common options myths, and explain how to use options properly (getting the greatest reward while managing your risk).

I’ve enlisted the help of one of my great friends and longtime collaborators, Money Map Press Editor William Patalon III, to help with the mythbusting section. I always enjoy my conversations with him, and I know you will, too.

Here’s what you need to know in order to use these very powerful tools to profit.

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