The Secret Advantages of Trading Options

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Buying Calls

Calls work the same as puts, except they give the owner the right to buy, not sell the asset. Donald Trump routinely uses options on real estate to speculate and accumulate properties.

He doesn’t buy one single building, he buys an option to purchase at an agreed upon price. When he’s got the block under control, he exercises his right to buy and builds his newest tower! Calls on real estate and calls on stocks are virtually identical.

1. The building is like the stock.
2. How long you elect to have the option to purchase the building or stock is the term.
3. The premium is how much you are paying to the building owner or market makers in the option for the right to buy at a set price!

Seems simple enough doesn’t it? Actually, it is quite simple, but option buyers frequently complain that they don’t seem to win (make money) as often as they should. This may indeed be true, but the reason isn’t because the pros have conspired against them; it's because they stacked the odds against themselves!

More information on buying puts and calls

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