Forex Trading Turn $300 Into $30,000

[BRYAN]

http://riches.forexequalizer.com/

[Weston]

eh ? lost the world silver stockpile.. is there an article i can read on that sounds interesting

[dinar4me2]

Yeah, OP, what happened?

[It's What's For Dinar!]

My best friend turned $500 into $30,000 buying short term call options on Microsoft back in June or July of 1998 or 1999. Best play he ever made.

But options are a dangerous, dangerous game. You can lose everything. I would not recommend it to anyone. Ever.


Options are actually a relatively safe way to use large amounts of leverage. You can lose everything, but not more than everything.

For instance a call option is the right but not the obligation to buy something at a certain price at a certain time. Basically you pay an insurance premium to have that right and that is what the option is.

A futures call contract is an obligation to buy something at a certain price on a certain date and is much more dangerous.

With an option, the maximum you can loose is the money you paid to buy the option. With a future, the amount you can loose can go many, many times higher than the initial margin requirement (which might be 1% of the full value of the contract). So for instance with a future, if the price goes down 50% you can loose $50,000 on an initial investment of $1,000. Whereas with an option, you would only lose the initial amount you paid for the option. While you won't make as much with an option as with a future, because of the insurance overhead, they are much less risky.

You do need to be careful with options as well because I believe i heard that somewhere around 90% of options expire worthless.

I sincerely doubt that options or futures will be outlawed as there is too large a market and allows for producers to set prices and stabilize their businesses by having others assume the risk. For instance, a farmer might sell a future for his corn crop at the current rate. If the price goes up, he still has to sell it for the lower price according to the contract, but if the price goes down, he will get the higher price which he negotiated. Therefore, if he is risk averse, by selling his crop in advance, he can lock in a certain amount of revenue for his efforts no matter where the price goes.