Stock options can be looked at from two ways, either the buyer, or the seller. In my case, what I was interested in was being the seller of stock options, in order to try to make a better investment of my money. An option is the right to buy or sell an item at a set price, whether or not the item goes up in value. For example, lets say I had $100,000 worth of a particular stock. I could sell you the option of buying the shares for $100,000 in a months time, and the shares could go up or down in value. I would charge you a certain percentage to give you this option, something like 2-5% depending on what the market was like, and what I wanted to do. The same is also true with selling shares at a set price. Let's say you already had $100,000 worth of shares, and you wanted to protect them from a possible crash, you could arrange to sell them to me in a months time for $100,000, which you would probably only want to do if the price of the shares went down more than the percentage that you gave me.
There are two types of stock options: "puts" which give the holder the right to sell the stock at a guaranteed price, and "calls" which give the holder the right to buy stock at a guaranteed price. A good way to sell stock options is to sell the option to buy your stock in the market, at a higher price than what it is, and if the stocks go up to that level, you have to sell it, and you would miss out on any profits over that amount. However you have made a profit not only of the percentage, but the higher value of the stock, and if the stocks go down, you get to keep the percentage which is the price to buy the option. I don't understand it that well, and you want to have solid financial advice before you risk a lot of money on the stock market, but so long as the whole market doesn't crash suddenly, you can make a good living from selling stock options.
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