Option Trading with Zero Risk

Everybody wants the leverage (and potential profit) that comes with option trading, but few people are eager to risk their hard-earned money to see if it will actually work. I know because I felt the same way back when I was getting started.

Fortunately, I overcame my natural fear and decided to take action. The results have been nothing short of amazing.

But I didn’t overcome my fear of losing money by jumping head-first into the market. Neither did I overcome my fear by learning more strategies or filling my head with the daily stock market news.

What I did was far more beneficial. I started using a zero-risk method of option trading. What is this method? I will tell you… It’s called "paper trading." Here’s how it works…

Instead of trading with real money, you trade on paper only. When you find an attractive stock that is ripe for an option, pretend that you’ve actually executed an order, and simply record the price you paid for the option. Then, over the next few days, track the price of the option to see what happens. Does it go up? Does it go down? Most importantly, are you making money?

If you really want to get the full benefit out of this method, then give yourself an imaginary account balance of, say, $5,000. Use the money in your imaginary account to trade options. Reduce your cash balance when you buy options; add the cash back when you sell.

In this manner, you can see how good your trading skills really are. You can see if you would have actually made money or lost money in real-world situations.

Sound a like a waste of time? A little too childish? It’s not. This is the exact same strategy I used to get comfortable with option trading. I paper traded not for a few weeks, but a few months before I started using any real money. This way, I got to really see how the market works and what influences the price of option contracts. I got to see where I was doing things right… and where I was doing things wrong.

Think of it this way. Have you ever played the board game Monopoly? It’s a simple game that teaches the basic principles of real estate investing. By playing the game, you naturally acquire some of the real skills you would need if you were to buy and rent property as a landlord.

Paper trading is similar. It is a game you play to learn the skills required for being a successful option trader.

This kind of experience is invaluable. And the best part is you can’t possibly lose any money paper trading because you’re not using real money. You’ve literally got nothing to lose!

Best regards always,

A.J. Brown