Thought I’d share another helpful tip from the recent seminar I went to 😉
If we think like the rich, and act like the rich, then wouldn’t it make sense that eventually we will become the rich? Yup, I think this makes a lot of sense 😀 For example rich people don’t say “I can’t afford that.” Instead, they ask “HOW can I afford that?” This turns a problem into an opportunity which forces them to be solution seekers 🙂 Why is this important? Because that’s how we make money in this world (^o^) Financial gain comes from finding solutions to other people’s problems.
Every dollar I’ve ever made so far has been a result of me helping someone else to solve a problem they had. This is an interesting realization for me 😮 Is this true for you too? The rich are solution seekers, and the poor are complainers 😛 Technology companies like Google for example make billions of dollars each year because they offer solutions to so many everyday problems.
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So how to act on this knowledge and make it a reality? Well some investors may not feel comfortable if their stocks suddenly lost a lot of value 🙁 For example if John has a lot of McDonald’s shares but is retiring soon, he may want to buy some insurance against a market crash. Sounds like he needs a solution 😀 Let’s help him find one!
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Today $MCD is trading at roughly $100 per share. John wants to find someone who would be willing to buy his MCD stocks from him for at least $90/share when he retires next year. This way, he limits his downside risk 🙂 Of course he doesn’t have to sell if the share price doesn’t fall below $90. It’s optional for him. So in summary, he benefits from unlimited upside if MCD climbs higher 🙂 And if the stock falls the most he can ever lose is just 10%. Pretty good plan for John.
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But who will agree to potentially buy the shares from him at $90? Well that could be us 😉 And for our services as his insurance policy, he will have to pay us a juicy juicy premium, haha 😀 This is an example of a put option.
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So I called my broker yesterday to upgrade my account to level 4. The change will take 3 business days. But once the upgrade is complete I will be able to sell put options and make some extra side income via option premiums (^_-) If I keep thinking like the wealthy and discover new ways to solve problems for other people, then I’ll eventually become rich myself :0)
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Random Useless Fact: Burgers and fries are often cheaper than salads. This is part of the reason why the U.S. spends $190 billion on obesity-related health care expenses each year.
Random Useless Fact: Burgers and fries are often cheaper than salads. This is part of the reason why the U.S. spends $190 billion on obesity-related health care expenses each year.
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I love that pic “This is why America is so fat”. So agree. Obesity is really high in America because fast food are cheaper than nutritious food.
Yeah, that’s why poor people tend to be more at risk to suffer from obesity and health problems than the wealthy. It’s kind of sad, but that’s the reality I guess.
Do you intend to blog about your options trading ? I would find it really interesting to see how you get on
I will now 😉
Love the pic of the guy trying to find answers! 😀 . I wish you luck with the options trading and look forward to reading about your experiences. I understand how options work, it is just… well… I’m interested to see how you do. I’m doing well enough in my other endeavours for now to not “play” there – Cheers, and should you need a crystal ball, I might have a slightly used one I can loan you 😉
I tried that in Google and one of the autofill results I got was “help I accidentally pooped on my boyfriend” lol. I’m amazed at some of the stuff people actually search for on the net. I have no idea how I’m going to do with options. It sounds complicated. But then again, so is anything else that I haven’t yet learned 🙂
I tried, but I couldn’t understand the option trading. I hope I can learn a lot about it from you.
I know what you mean. The terminology itself can be confusing 😕 But it’s commendable that you tried at least. Most people give up before they even start. Maybe all you need is a refresher and some real life examples 🙂 Hopefully I’ll make enough sense of it myself to explain how it works in the future.
You are definitely “taking action”.. It is more profitable to SELL options the to buy them. By selling a put or call, you receive the option premium up front.. When selling options, time is in on your side.
Thanks, that seems to be what I’ve been reading as well. There’s usually more consistent earnings in selling than buying. They made me do a test before putting in the request to upgrade my account level. They asked me what my risk would be if I sold a naked call option. I had a feeling this meant selling stocks to someone at an agreed price even if the underlying asset became much more valuable, so I kind of took an estimate guess and said “unlimited.” Whew, luckily I got it right 🙂 The more I learn about options the more I understand why discount brokerage firms try to restrict this type of options trade for their clients.
My understanding of naked calls is as follows:
You don’t own the shares and then write a call. If XYZ is price at $40.00 and you write a (1 contract ) call for $41.50. For doing this, you collect the premium up front. During this time the price of XYZ can increase with no limit. If the option is assigned, you will automatically purchase shares at the market price and automatically immediately sell them at the strike price of $41.50.
This is basically unlimited risk like you stated.
Interesting reflection. I think a lot of our approach to money stems from how we think of ourselves in relationship to it. If we think like a wealthy person, we may give ourselves the freedom we need to discover new solutions. Thanks for sharing this with us.
Yup. Rich people think positively about their financial outlook, and due to the law of attraction, good things will come to those who think good thoughts 🙂
When I was incredibly broke and people would ask how I was doing, I would say Living the Dream. Check it out, I convinced myself that I was living the dream and eventually, the dream came true. I’ve got a beautiful house, nice car, beautiful fiance and great friends. I firmly believe that mindset changes lead to lifestyle changes for better or worse.
That’s true. Successful people believe “I create my life.” While unsuccessful people believe “Life happens to me.”
Can you do another post on trading options? I’m still looking into this and find it a bit confusing. o__o?
PS – I find it odd and disturbing that there’s enough people that would accidentally set their dog on fire and have time to google (and it end up high in the possible search results).
Yup, I’m just getting started myself. After I trade my first option contract I’ll post about my experience 🙂
Very cool that you’re about to take control of your own investments. It wont’ be easy, especially at first, but it will be worth it! And you have a great sense of humour too 😉 Thanks for sharing on twitter :0)
Thanks for sharing your tip. Very insightful. All I used to do was complain. While, I still complain from time to time, I try to put more energy to making/saving/managing my finances.
Next month I’m attending a seminar hosted by Money Sense. I’m super excited for it. 🙂
That’s a great opportunity. Maybe you can write a post on it afterwards and tell us what happened at the seminar 🙂
Oh my gosh, I loved that Google comic a little too much 😛 There’s no point in saying you can’t do something. If it’s ever been done before, there’s clearly SOME way to get there. And if it hasn’t been done before… why not be the first?
That’s a great attitude to have 🙂