Completely new to the stock market and options? So was I once...

I've included this section for those that are completely new to options and stock market investing.

If you are completely new, let me give you some words of encouragement. The language you'll hear might be foreign to you but it is NOT difficult. Just open you're mind and you will find it much easier than you had expected.

In actual fact, most of the techniques used in stock and options investing you already use in your everyday lives.

Look at this.

Have you ever rented a house or been the landlord of a house?

Have you ever bought anything with a down-payment?

Do you have car insurance or house insurance?

Ever bought a lottery ticket?

Well each of these things use the same principals as stock options investing. It's just that the brokers and the financial institutions use strange words to make it sound more difficult than it really is.

Let's start by looking at a house.

People can buy and sell a house just the same as people can buy and sell shares in a company. When you own shares in a company you own a piece of the company. People who buy and sell houses attempt to buy at a low price and sell at a high price. And it's just the same in stock investing. People attempt to buy shares in a company (or stock as it's called) at a low price and sell at a high price. That's the basis of stock trading.

When you rent your house to someone, they pay you a regular monthly rent for the use of your house. Well you can also rent your shares. When you do this you receive a monthly premium (it's not called rent in the stock market).

When you rent your shares to someone you receive the premium and you give the other party the use of your shares. Now here's the difference. By giving someone else use of your shares you are giving them the right to buy your shares at a pre-agreed price by a pre-agreed date (usually the end of the month).