The last eight months has been phenomenal for the stock market. Just by investing in the local KLCI index, an average investor would have easily made a 50% capital gain return. Now that is impressive even by Warren Buffets’ standard, who averaged 23% return p.a. over his entire career.
So while the stock market basks in celebration in the longest economic boom the world has ever experienced, I shall present to you an alternative form of investment – Options. It would seem illogical for anyone at this current point of time, to be interested in this derivative form of investment, considering the Bull Run in the stock market. So why bother introducing it? The reason, plain and simple…..an extra bit of information never hurts anyone. (or was it the other way around?)
Contrary to the belief by many that Options are limited to institutional and sophisticated investors like hedge funds, Options are actually very much accessible even to an average individual. Theoretically, no amount of capital is required to start-off your options trading (save for the margin requirements).
Now, for benefit of those who haven’t got the slightest clue what I’m talking about thus far, and to those who have heard of options, but need a refresher course, I shall go through the basics options in the first part of my blog entry. And once that is out of way, I shall share with you a trading strategy that is utilized by many, that has the ‘potential’ of generating consistent return over a long period of time.
And to make things a little bit more interesting. I shall be using actual prices from the market to show you how this strategy is carried out. And you shall be the judge on the feasibility of this trading strategy.
(Coming up next – Options 101)
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