There are many strategies to trade options. This focuses mainly on its use as leverage. One option contract represents 100 shares, and its cost is much less than actual shares. That should give you an idea of its leverage.
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There are many strategies to trade options. This focuses mainly on its use as leverage. One option contract represents 100 shares, and its cost is much less than actual shares. That should give you an idea of its leverage. In most cases you would only be trading the option, and not the actual shares. However, the profit/loss would be similar to as if you were actually trading 100 shares.
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Compared to futures, options allow you to do leveraged investing based solely on the buying power of your equities without needing any cash or loan. There are at least 2 ways to do this:
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There are at least 2 ways to do this:
1. Buying deep in the money LEAPS calls.
2. Synthetic long stock.
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#### Synthetic long stock
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This type of options trade allows you to do leveraged investing based solely on the buying power of your equities without needing any extra cash or loan. It is similar to using futures for leverage, except no cash is needed.
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Overview video:
- [Buying Stocks? Try This Instead - Synthetic Option Strategy](https://youtu.be/5G9tItA28Uw?si=YROxKchDAoV9DlTd)