Options Trading Myths Dispelled

Posted by Ian Cooper - Tuesday, March 1st, 2011

For those of you still on the fence with trading options... don't believe everything you've read or heard.

These are some of the top myths that may have kept many of you from raking in thousands... if not millions trading options.

1. Options are only for the professionals with years of experience.

Not true. If this were true, you couldn't find the thousands of sites and software solutions offered for beginners. This just isn't true. In fact, if it were true, Options Trading Coach wouldn't exist.

2. You have to be rich to trade options.

Again, not true. You don't have to be rich. In fact, it's oftentimes recommended that options traders start out with small accounts. I very rarely see new investors starting with gobs of money. They typically start off small and grow the monies risked after they've built up confidence.

3. Options trading isn't so popular

Really? That's like saying cable TV was a fad. Or that the Internet was a fad. Right now, as much as 5% of all accounts are approved for options trading... and that's only growing.

4. 80% to 90% of all options expire worthless.

Wrong. Only about 30% of all options, as explained by the CBOE, expire worthless. The idea that 85% of options expire worthless is from a famously flawed SEC study... which didn't account for exiting options prior to their actual expiration.

5. Options trading is far more riskier than stock trading

Actually, no. Options allow you to invest with much less money for greater returns than stocks. Nice try with that one, though.

6. It's too difficult to understand options strategies

If you know the difference between a put and a call, it's not too difficult to understand strategies. Once you understand the basics, you can understand even more.

People think it takes years to learn options... that this trading is complicated and tough to learn. But it's not true. In fact, I've had people understanding options in a matter of days... if not hours from the reports we've posted on Options Trading Coach.

Once understood, options are as easy as trading stocks.

This article first appeared on the Trader's Pit.

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