bobby's world

i think a big misconception about stock/trading is that you can only make money when a stock goes up.
Buy a stock at $10, and watch it go up to $100. EASY.

however, you can also make money if a stock goes down. OR you can make money if you think a stock will make a big move in either direction (up or down). OR you can make money if you think a stock will not make a big move in either direction (trade relatively flat)

ways to make money.

1. you think GOOGle stock will go up. you buy GOOGle stock at $100, it goes up to $250. you make $150
2. you think GOOG stock will go down, so you "short" the stock (or borrow the stock). basically, you sell the stock at $100, it goes down to $40, you buy the stock back. you make $60.
3. you think GOOG stock will make a big move in the near future, you think it will go up OR down, but you're not sure which. so you buy the "straddle" which is an investment strategy consisting of two different stock options. (car insurance example. basically, you buy special car insurance because you think something crazy is going to happen, you just don't know exactly what. but you know nothing is NOT going to happen *yes double negative...so you buy special car insurance. something crazy DOES happen. and you exercise the insurance)
4. you think GOOG stock will NOT make a big move in the near future. if GOOG is worth $100, you think that GOOG will stay around $100 for the near future. so you sell or "short the straddle". (example, basically, instead of buying special car  insurance, you SELL the special car insurance to someone else, you collect money for selling the special car insurance. and hope that the car insurance expires worthless)

sell selll sell