Many people are taught to invest their money in the stock market so that they can retire comfortably. The problem with this general strategy is that the stock market has to actually go up in order for the investor to make money. If, however, you take the time to learn some stock options basics, you can make money in just about any market environment.
When the Market Goes Down
For the beginner, or even intermediate, investor it is usually a sad period of time when the stock market declines in value. It is even more so when the decline continues for more than a few weeks or months. As you increase your overall investing knowledge, however, you can start to utilize a few options trading strategies that will help you make a profit even as the stock market loses value.
Perhaps the easiest method is to simply purchase a put option. Put options are unique in that they actually increase in value as the price of the underlying stock decreases. Of course, as you progress in your training, you will learn much more advance options strategies such as the straddle option.
When the Market is Flat is Going Up
When the stock market is flat, or going up, just about any type of investor can make money. You can, however, turbo-charge your results by learning options trading strategies to your arsenal. In addition to simply buying a call option you can learn the art of selling covered calls, and even implementing advanced option techniques such as the butterfly and bullish options spreads. Options provide the leverage you need to turn good results into great results.
If you are new to investing take the time to build a solid foundation of knowledge before trying any technique more advanced than a typical buy-and-hold. Once you have gained sufficient knowledge then you can proceed to building upon the stock options basics you have mastered. Until then, do not put your hard earned money at risk.