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The Mathematics Behind How People Accumulate Wealth Through Options Trading

Are you looking to get rich quick with options trading? In this blog post, we will explore the math behind how people can make a lot of money with options trading, but also the risks involved.

Let’s start with an example using Yelp stock. If you have $10,000, you can choose to buy stocks or stock options. If you buy Yelp stock at $36 a share and it goes up to $46, you make a profit of $770. However, if you buy call options for Yelp stock at $38 with the same $10,000, and the stock goes up to $46, you could potentially make a profit of $90,000.

The key difference between buying stocks and stock options is leverage. With options, you can potentially make a lot more money with a smaller investment, but it also comes with a higher risk. If the stock price doesn’t move in the direction you predicted before the option expires, you could lose all your money.

Options trading is high risk and high reward, and it’s important to understand the risks involved before diving in. Some people make a lot of money by being lucky or strategic, while others lose a lot by being irresponsible.

So, if you’re considering options trading, make sure to do your research, understand the math behind it, and be prepared for the risks involved. And remember, it’s always a good idea to hedge and lower your risk when trading options.

If you want to learn more about options trading, check out the link to my other video below. And don’t forget to subscribe for more financial tips and advice. Good luck and trade wisely!



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