“I do not have a huge capital, but can I start options trading?”
I have been asked this question a few times by our readers and so, I will be sharing my thoughts in this article. However, before I give my view, I would like to share some of the trades that I have made this year.
On 5 April, I sold a cash secured PUT contract (reserved $4,500) for 32 days and collected a premium of $520 (>10%).
On 24 April, I bought an AMD LEAPS (CALL) for $2,960. On 1 July, I sold the LEAPS for $3,400 and made a profit of $890.
On 13 Aug, I bought a Microsoft LEAPS (CALL) for $2,800. On the same month 27 Aug, I sold the LEAPS for $3,610 and made a profit on $810.
On 1 Sept, I bought 2 Pfizaer LEAPS (CALL) for $568. On 15 Nov, I sold the LEAPS for $880 and made a profit of $312.
On 22 Sept, I bought a Nvidia LEAPS (CALL) for $1,740. In less than 2 month, on 15 Nov, I sold the LEAPS for $7,100 and made a profit of $5,360.
Therefore, based on the above examples, it is possible to start options trading with a small budget and still make some profits out of it, provided you chose the right stocks at the right time. Depending on the budget you have, you can either buy LEAPS on a lower premium and wait for share price to rise before selling them or you can do the wheel strategy and sell cash secured puts or covered calls on the stocks that are not current trading on a high price.
To get started on options trading, do check out the newbie guide that I have prepared for you. Link below:
The Newbie’s Guide To Options Trading