Can You Become Rich (Or A Millionaire) Trading Options?

One of the first things a new options trader asks is, “Can I get rich from trading options”?- you’re probably wondering the same thing! You technically can become wealthy from working with options if you have discipline and a willingness to learn. 

Options trading can be profitable, but you probably won’t become a millionaire overnight.

Option trading can make you rich but you can also get rich by hitting the lottery. In both cases the odds are extremely small that you will ever get rich or be a millionaire. 

There are some option traders who make a living doing it. There are also option trades who have become millionaires! However, the odds of you being able to do that are very small. 

Options trading can be profitable since you can control a lot of underlying stock. When the stock performs how you want, you get a much higher return much faster. 

Plus, you save money when you don’t buy shares at their full price. However, that doesn’t mean you’ll get rich. Many people will sell options as another form of income and this for sure won’t make you rich fast. 

You can make high profits by trading options, but the odds of you becoming a millionaire aren’t very high. However, that doesn’t mean you should quit trading before you start! I tried to include everything you need to know below. 

How To Become Rich Trading Options

It’s important to realize that options are much more complicated than stocks. That means you need to put more time, effort, and research into preparing your options trading strategies. 

From there, you can slowly build your options account over time. You don’t want to rush!

Options can expire, so build your strategy around that date. They’re also very versatile, meaning you can manage some of the risks that come with them. 

Many people appreciate that you can benefit from options, no matter what direction the market moves as long as you plan.

Familiarize yourself with the covered call and the long call. If you’re interested in covered calls, I recommend reading the book Covered Calls for Beginners. It offers plenty of strategies to use and ways to make more income.

The long call is a very popular strategy that lets you reduce some of the risks associated with options trading. With this strategy, the premium is the maximum amount of loss you can experience. 

Many beginners utilize it until they feel comfortable trying other methods.

Develop Your Option Strategy

To earn the highest possible profits, you want to buy an option on an underlying stock you believe will shoot up in price before it expires. You can then sell the option for a high return since you control more underlying stock than spending the same amount on actual shares of a stock. 

Of course, there are plenty of other trading strategies you can try. For example, if you know a company isn’t doing well, you can buy put options instead. They make money when the stock price drops. 

Many options traders repeat their strategy again and again after a success. However, it’s essential to realize that you want to go slow. 

Options trading isn’t a “get rich quick scheme!” Professional traders often consider it to be gambling if you are just picking a stock and hoping it goes up before expiration. 

You might be right or you might be wrong but it really can be a gamble. 

Realize It’s A Slow Process

You should start with smaller amounts of funds and work your way up to controlling more options. Beginners often fail because they put more money into trading than they can afford to lose. 

While options trading will usually have less money at risk per trade than when trading stocks, you still need to know precisely what you’re doing.

That’s why I recommend you take options trading slow. Take your time learning, practicing, and researching options. 

It’s impossible to predict with 100% accuracy how an equity’s price will move, but you can make a reliable, educated guess. Many beginners don’t realize how much effort and thought goes into options trading.

You should know the following about a company before you buy their stock or option. 

• How stable is the company?

• Does it have consistent earnings growth?

• How intense is the competition in the industry?

• Is it strong against its competition?

• What are the company’s main strengths and weaknesses?

• What direction do you expect the stock to move?

Overall, you should never jump into options trading without doing your research first! If you do, you won’t understand the risks that come with the options. 

Taking more time to prepare allows you to plan a winning strategy.

Take Emotions Out Of It

Many options traders perform one strategy again and again until they earn a ton of money. This process allows them to specialize in one particular trading strategy. 

It also helps you remove your emotions from the equation since you can guess the outcome and know what a successful trade looks like. 

When you trade based on emotion, you’re sure to make many costly mistakes! Instead, choose a safe and straightforward trading strategy that you can replicate. 

Try it over and over until you’re familiar with it. Make sure also to take your time and research the results. 

You’ll need to understand trading psychology before you make your first purchase.

Overall, you want to use an emotion-free strategy. It’s difficult for beginners to remove their emotions from options trading, especially if they’ve never tried any trading. However, a simple trading style is excellent for reducing stress and anxiety over your money.

Don’t Gamble With Your Money

Many traders looking to get rich tend to gamble with their investments. Are you trading for specific reasons or because of the thrill? If you are, you’re likely gambling with your trades. 

Gambling on options is extremely risky and is sure to cost you money eventually. You might get lucky once or twice but you will eventually be wrong. 

Instead, make sure to trade with a strategy. If you need to step away from options trading for a while to “reset” yourself, that’s okay too! 

You want to make sure you’re trading methodically instead of for excitement.

Overall, you’ll make better choices with your trades when you aren’t gambling. It may be tempting, especially if you want to get rich, but realize you’re hindering your profits and taking on more risks when you do this.

Final Thoughts

To summarize, you can become rich trading options, but you need to realize that it won’t happen right away and it’s unlikely to ever happen at all. Spend time working on your trading strategies and following a plan that works for you. 

Doing your research first will benefit you greatly.

Moreover, read as much as you can about options reading. The more information you have to use, the more profit you can turn! You probably won’t get rich right away, but if you consistently take profits and follow a proven strategy you might!