How to Make Additional Income with Option Trading in 2023
Lately, you may have been seeing people share their profit card from their brokerage account on a option trade they took. And you may be wondering, is this legit? Can I make additional income with option trader.
The answer is yes! You can make a lot of extra income with option trading.
Use the quick links to jump straight to learn more about making additional income with option trading.
- Can you Trade Options for Additional Income?
- How Much Money do Option Traders Make?
- Can you get Rich from Selling Options?
- How to Trade Options for Additional Income
Now, the numbers you may see may excite you, and get some dopamine pumping, but it’s very important to note that you need to go in with a strategy plan before option trading.
You need to learn the basic fundamentals, risk management, and some chart patterns–or you’ll lose all you hard earn cash.
Okay, let’s get started!
Can you Trade Options for Additional Income?
Yes, trading options is another great income source. When you buy and option contracts, it can quickly compound.
For example, let’s say you have $500 to invest into an option contract. And if you’re swing trading, and the stock is moving your direction, you may net 200% above your initial investment.
$500 initial investment multiply by 3.13 equals, $1,565.
How Much Money do Option Traders Make?
It really depends on what your daily goal is. There are 252 trading days through out the year.
If your goal is to make an additional $20 per day, that’s about $420 per month or $5,040 per year.
If your goal is t make $100 per day, that’s about $2,100 or $25,200 per year.
Here’s a chart that breaks down how much you can make per year when trading options.
Can you get Rich from Selling Options?
You can absolutely become rich trading options.
Like show on the chart above, if you focus on making $2,500 per day with 252 trading days, you’ll be earning about $630,000 on a annual basis.
Selling or buying options is a wonderful source to increase your wealth quicker.
How to Trade Options for Additional Income
Just recently, I made a trade that hit over %400 in return.
I share this not to brag, but so that you’ll understand I know what I’m talking about when it comes to starting trading and making serious income with it. Moreover, I’ll be the first to tell you that these kinds of income figures aren’t typical with option trading—and that it’s taken me 2+ years to reach this point in my option trading.
Step 1. Learn Basic Fundamentals
Before you just throw money into an option contract, you need to learn the basic fundaments. How do you buy contracts, what are the greeks, and how do you actually pick the right option contract.
There are basic rules and terminology that you need to memorize, so you’re not lost in the middle of a trade.
Article to help you with the basic fundamentals: Understanding the Basics of Options for Traders: The Ultimate Beginners Guide in 2022 (alfatoro.com)
Step 2. Learn about Risk Management
Trading is all about probabilities and having a strategy that makes sure you’re profitable at the end of the month. You need to learn the important of setting a stop loss, how much to size in your positions, how to take profits, and learning to set a simple set of trading rules.
You can be an okay option trader, but be successful with proper risk management.
Article to help you learn how to risk & trade management: Understanding Risk & Trade Management for Options Traders: The Ultimate Beginners Guide in 2022 (alfatoro.com)
Step 3. Learn Supply and Demand Zones
Another important skill to learn is how to find Supply and Demand zones. When you’re finding strong Supply and Demand zones, you’re searching where institutional traders have bought and sold shares of a stock.
Institutions are not to be played against, play on their side, and you’ll have more consistent wins.
Article to help you find Supply and Demand: How To Find Supply And Demand Zones: Easy Beginner’s Guide (alfatoro.com)
Step 4. Learn Chart Pattern Strategies
Another charting skill that will help you, is being able to identify reversal patterns. Reversal patterns will help you not purchase contract that is not going to help you.
- List of Chart Patterns (alfatoro.com)
- The Best 12 Reversal Patterns For Option Trading in 2022 (alfatoro.com)
