#1 30% annual return on your capital? Possible?

by admin on January 4, 2012

Is this for real? Is it a scam? But Wow I am so interested? :p

These were the first few thoughts that came to my mind when I was first told about a possible way to generate about 30% annual return.

First of all, I would like to put up some disclaimer that I am not a qualified financial adviser.
All the information found here are for information and sharing purposes only and it should not be taken as any form of personal investment advice.

Secondly looking for any sort of passive income is a tough journey and will be full of ups and downs.
Likewise in order to achieve 30% annual return is not going to be a smooth journey.
That is why I am writing this series of blog post to share what I will be about to experience.

How it started?

Okay, enough of suspense, I started this journey by reading this book called “The Complete Guide to Option Selling” by James Cordier and Michael Gross.

So what is it all about?

This book as the title says, is about option selling. So what does option selling means?
An option to put it simply is a form of contract that offer the buyer the right but not the obligation to buy or sell certain items at a specific price.

So as an option seller, you sell that contract to the buyer. In other words, the seller is obligated to buy or sell the items at the specific price.

Are you confused yet? Not to worry as you can look up the following resources for more information on options.

– Getting Started in Options, 3rd Edition by Michael C. Thomsett
888options by The Options Industry Council

How does this option selling works to earn money?

The particular option selling method described by the book actually works quite similarly like a casino (just an analogy and nothing to do with gambling), so now imagine you are the casino and you are accepting bets that have pretty low probability to win. The key here is that those bets have very low probability to win and therefore you stand a very high chance to win.
Since the probability to win is low, the bet amount will be low as well.
So at the end of the day as a casino, your objective is to collect as many of these small bets to accumulate your profit.
Even if there is one winner out of the 1000 bets you have collected, you still stand to keep some profit.

Hopefully my example does not confuse you too much. Nevertheless I would strongly recommend to read “The Complete Guide to Option Selling” by James Cordier and Michael Gross for more information.

Moving forward, I will be updating more on how my journey fair and what are the problems that I will be facing. So please stay tuned with more updates!

So do you think this is considered a good passive stream? Yes/No, please feel free to comment.

Books that I have read thus far

– Getting Started in Options, 3rd Edition
Michael C. Thomsett

– The Complete Guide to Option Selling
James Cordier and Michael Gross

– Options on Futures, Workbook: Step-by-Step Exercises and Tests to Help You Master Options on Futures: New Trading Strategies (Wiley Trading)
John F. Summa and Jonathan W. Lubow

– Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor (Agora Series)
Lee Lowell

Cheers,
Charles

Disclaimer: The author is not a licensed financial advisor and the information is provided for educational and information purposes only.
Trading commodity futures and options have large potential rewards but also contains a high level of risk and is not suitable for all investors.
Only risk capital should be used when trading futures or options.
None of the information provided constitutes a solicitation of or a recommendation to buy or sell any futures or options contracts.
Please seek the advice of a professional financial advisor before investing your money in any financial instrument.

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