The Beginner’s Guide to 10X Your Returns with Less Cash

 Did you know that you can control hundreds of shares of your favorite stocks without spending thousands of dollars upfront?

With options, you can potentially 10X your returns using just a fraction of the cash you’d need to buy stocks outright!

And the best part? You don’t need to be a Wall Street pro to get started.

But here’s the catch: options can be a double-edged sword. If you use them the right way, you can amplify your profits. Use them wrong, and you could lose your entire investment faster than you can say “stock market.”

If you’re curious about how options work and want to learn how to trade them like a pro without risking your life savings…

Then you’ll want to stick with me in this article, because I’m going to break down everything you need to know about options trading for beginners.

Let’s dive in!

What Exactly Are Options?

Options are financial contracts that give you the right, but not the obligation, to buy or sell a stock at a specific price by a certain date. Think of them like a coupon for your favorite store: you can use it to buy something at a discount, but you don’t have to use it, and it expires after a while.

Here’s the key: options let you control 100 shares of a stock without owning them. Instead of paying full price for the stock, you pay a smaller amount for the option contract, which can lead to big profits if the stock moves in your favor.

There are two main types of options:

• Call Options: These give you the right to buy a stock at a set price (called the strike price) before the option expires. You use calls when you think the stock price will go up.
• Put Options: These give you the right to sell a stock at a set price before expiration. You use puts when you think the stock price will go down or to protect your portfolio from losses.

When you open your brokerage account and look at an “options chain” (a table showing all available options for a stock), you’ll see calls and puts listed with different strike prices and expiration dates. It’s like a menu of choices for betting on a stock’s future price.

In the options chain above , you’d see columns for strike prices, expiration date, and the cost of each option. Don’t worry if it looks confusing—we’ll cover how to read it later!

Why Trade Options Instead of Stocks?

So, why bother with options when you could just buy stocks? Here are four game-changing benefits that make options so powerful:

Benefit #1: Control Stocks with Less Cash

Options let you control 100 shares of a stock for a fraction of the cost. Let’s look at AAPL trading around 196. Buying 100 shares would cost $19,600. But a 200 call option for that stock might cost just $900.

In the chain above, a call option with a $200 strike price and 56 days to expiration costs $.00 per share, or $900 total (since each contract controls 100 shares). That’s 5% of the cost of buying the stock outright, yet you still get to profit from the stock’s price increase!

Benefit #2: Amplify Your Returns

Because options are cheaper than stocks, they offer leverage. This means small price moves in the stock can lead to big percentage gains in the option’s value.

For example, if that $200 stock rises to $220, your 100 shares would gain $2,000 (a 10% return). But if your $200 call option doubles to $1,800 because of the same move, that’s a 100% return! That’s the 10X potential I’m talking about.

Benefit #3: Flexibility to Bet Up or Down

With options, you can profit whether the stock goes up (using calls) or down (using puts). You can even use puts to protect your existing stock holdings, like an insurance policy against market crashes.

Benefit #4: Defined Risk

When you buy an option, the most you can lose is the amount you paid for it—no more. If you spend $900 on a call option and the stock tanks, you lose $900, not $19,600 like you would owning 100 shares.

What Are the Downsides of Options?

Options are powerful, but they’re not risk-free. Here are two big downsides you need to know:

Downside #1: Time Is Your Enemy

Options have an expiration date, unlike stocks, which you can hold forever. If the stock doesn’t move in your favor by the expiration date, your option could expire worthless, and you lose the entire amount you paid.

For example, if you buy a $900 call option and the stock stays flat or drops by expiration, you lose that $900. This is called time decay, and it’s why timing matters with options.

Downside #2: You Can Lose 100% of Your Investment

While your risk is limited to what you paid, options are riskier than stocks because you can lose your entire investment if the stock doesn’t move as expected. If you buy a call option and the stock falls, or a put option and the stock rises, you could end up with nothing.

To avoid this, you’ll need to be strategic about which options you buy and when. That’s where the steps below come in!

3 Simple Steps to Start Trading Options Like a Pro

Ready to dip your toes into options trading? Here are three beginner-friendly steps to get started without blowing up your account:

Step 1: Choose a Stock You Know

Start with a stock you’re familiar with, like Apple, Microsoft, or Tesla. Look for stocks with high trading volume and active options markets (check the options chain for lots of “open interest”). This ensures you can buy and sell options easily without getting stuck.

For example, if you like Apple, pull up its options chain in your brokerage account. You’ll see calls and puts for different strike prices and expiration dates.

In the chain above, focus on options with high open interest (e.g., 1,000+ contracts) to ensure liquidity.

Step 2: Pick In-the-Money Options with 60–90 Days to Expiration

For beginners, stick to in-the-money (ITM) call or put options, as they have a higher chance of retaining value. ITM calls have a strike price below the current stock price; ITM puts have a strike price above it.

Choose options with 60–90 days until expiration to give the stock time to move and reduce the impact of time decay. For example, if Apple is at $196, buy a call option with a $180 strike price or a put option with a $210 strike price.

Look at the delta (a number between 0 and 1) in the options chain. A delta of 0.60–0.80 means the option moves closely with the stock but costs less than buying shares.

Step 3: Place a Limit Order to Control Costs

Don’t buy options at the “ask” price—use a limit order to set your price slightly below the ask. This helps you avoid overpaying.

For example, if a call option’s ask price is $9.40 ($940 per contract), place a limit order at $9.30 Check the options chain for the “bid” and “ask” spread to gauge a fair price.

In the chain above, if the bid is $9.30 and the ask is $9.40, a limit order at $9.35 might get filled, saving you $5 per contract.

Conclusion

Options are like a superpower for investors: they let you control stocks with less cash, amplify your returns, and even protect your portfolio. But they come with risks, like time decay and the potential to lose your investment. By starting with familiar stocks, choosing in-the-money options, and using limit orders, you can trade options smarter and safer.

Have you tried options trading yet, or are you ready to give it a shot? Let me know in the comments below which stock you’re eyeing for your first options trade!