Home Based Business

How to Start a Home Business with
Options Trading and Credit Spreads

If you are like most people, in these
times of economic uncertainty you are
looking for a way to earn extra money,
that doesn't take a lot of time,
preferably from home and that doesn't
require a lot of capital to get started.
If you fall into this category then
options trading might be just what you
are looking for. Although trading is a
simple business to get started in, it is
far from easy and be wary of anybody who
tells you differently. Also you may
have heard that trading options is
risky, and while nothing in life is risk
free, there are ways to substantially
reduce the risk.

How much money do I need to start?

One of the beautiful things about
options trading is it's one of the few
businesses that you can take for a free
test drive to see if you can be
successful at it. By trading in a
simulator you can start your business
with no money. Obviously you won't be
earning anything either, but you will be
gaining valuable knowledge. You can
find a simulator at CBOE.com. After
you've traded in the simulator for a few
months and become consistently
profitable you can start with as little
as %2,000.

Finding a broker

The first step in getting started in an
options business is finding a broker.
There are many (excuse the pun) options
available, a few of the good ones
include, OptionsXpress, TradeStation and
Interactive Brokers. These are all
members of the Financial Industry
Regulatory Authority (FINRA) and the
Securities Investor Protection
Corporation (SIPC), which are two
organizations that protect you against
fraud from financial brokers.

Putting the Odds in your favor

While this isn't a comprehensive list
there are a few things that you can do
to stack the odds in your favor when
dealing in stock options. First of all
rather than buying puts and calls you
can use credit spreads. This method of
selling a higher priced option and
purchasing a lower priced option alone
will stack the odds enormously in your
favor simply because this method can
allow you to make money whether the
markets go up, down or sideways. As a
matter of fact using this method can
allow you to win as much as 80-90%PRCTG% of
the time, which is why professional
traders use this type of trade to
generate consistent income.

The next thing you want to do is a bit
of technical analysis and look at the
S&P stock index. If the index is moving
above it's 200 day moving average you
generally want to be purchasing stocks
or using bull put credit spreads. If
the index is moving below it's 200 day
moving average you should short sell
stocks or use bear call spreads.

How much can I earn?

This can fluctuate depending on market
conditions but by using credit spreads
you can make anywhere from 5-20%PRCTG% a
month. So with %10,000 you can generate
anywhere from %500-%2000 in extra income
a month.

Reducing Your Risk

1.Start off by trading in a simulator at
CBOE.com

2.Always use a stop loss or have your
positions hedged.

3.Never trade with money that you need
to pay for you day to day expenses with
such as rent and bills. Nervous money
always loses.

If you'd like to find out more about
options trading and credit spreads click
on the link in the resource box below
and sign up for a free 10 part course.

This article will look at the important steps in starting a
home business with options trading, from finding a broker,
to using a simulator to managing your money.

Technorati Tags : trading options money spreads

Originally posted 2009-06-29 14:00:43. Republished by Blog Post Promoter