You have two choices when you enter the market for investing: you can take a safe investment and attain consistent gains or you can take risky investments for great upsides but the possibility to lose a lot of money as well. It all depends on your goals and your personality. This is the mindset of a person who does not really understand everything the stock market has to offer. There is more to the stock market than simply stocks and bonds. There is another type of investment called an option. If you are to purchase an option, you pay a premium up front but it locks in a “strike price” for a certain period of time. This is the price you can but or sell (depending on the type of option) the stock at anytime before the option expires. So why does this change the way we should view the stock market? I will introduce a creative way to use options in which you can take on a lot of risk–meaning a lot of opportunity for large gains– without having to put a lot of money on the line. This strategy is based on speculation but can also be used on conjunction with market information to make a knowledgable investment decision. Let’s first make the assumption we are interested in a call option– that is an option that gives us the option to buy the stock at the options strike price. Therefore, we hope that at some point before our options expiration date the strike price will be below the market price of the stock. If this occurs we will excercise our option and immediately sell the acquired shares for a profit. However, the premium associated with an option becomes larger as the strike price and current market price become further away. Similarly as the time until expiration increases the premium will rise as well. This strategy involves putting very little money on the line so we wish to minimize our premium. Hence, we will attempt to find an option with a short period until expiration, a equal or higher than market strike price, or both. Let me break it down to you with a real life example. The stock we will be looking at is Microsoft. At this current moment this stock is trading at $39.69 per share. The shortest term options trading are set to expire just over two weeks from now. There is a call option available with a strike price of $42 dollars and a premium of only 2 cents per share. Thus we can purchase 100 of these contracts and it will only cost is 2 dollars. With this two dollar purchase we have the right to purchase Microsoft, if we choose, at $42 a share for up to 100 shares any time in the next two weeks; regardless of what occurs with the stock during that period. Chances are that it will not exceed this price but it is not unlikely either. Microsoft is a somewhat volatile stock and we stand to make an unlimited amount if it does do exceedingly well during this period. Let’s just say it rises to $43 dollars. Therefore we gain $100 dollars per share. Subtract off the inconsequential premium of $2 dollars and we have made a 4800% return on our investment. That is vastly greater than anything we can hope to attain from any other market opportunities. And worst case scenario, if Microsoft stays the same or even goes bankrupt in the next 2 weeks, we only stand to lose the $2 premium and we don’t excercise our option. The most powerful tool in the marketplace is knowledge. With awareness if the tricks that are available to all investors we can make the investment market a place for return as opposed to a blackjack table. There are many other similar opportunities and strategies such as options where you don’t need to risk it all to come out ahead. Try it out and have fun with it, because in the end, you won’t notice your losses, but you will notice your gains.