You may not be familiar with trading options. With trading options, a buyer is not buying actual stock and commodities, but the right to do something with the stock and commodities. There are many kinds of trading options. These are the most common, but they can be used in any market in which there is price fluctuation; effectively, this means all markets.

This is how options work. Suppose the current price of a share is $10, and you predict it will increase to $12 in about a month from now. It would be financially prudent to buy many shares right now. However, one may not have the money to buy a large amount of shares at a given time, or it may not be advantageous to buy those shares.

In this case, you could buy 100 shares if you had $1000. If the price goes up by $2 a share, you will make a profit of $200. While this is a nice amount to earn, you could make quite a bit more if you had more to invest.

Trading options allows you to offer a premium to any seller in exchange for an option. As long as the seller thinks the shares price will stay level at $10 over the next 30 days, he may be willing to cut that deal with you. Then you can buy an option to purchase said shares at $10 one month from now.

If the seller believes that their value will continue to be $10 and that he'll be getting a profit of 10 cents a share, he will probably agree to give them to you in 30 days in exchange for their current price.

If each share costs ten cents then you can buy 10,000 shares with $1000. And if a share rises to $12 then you can easily earn $2000 by selling those 10,000 shares. You can sell the shares for $12,000 immediately after investing $10,000. That means you have not made 20% profit but its 100% gain.

Options trading can result in greater profits in this way. But it can also result in greater losses. Suppose that instead of going up by $2 a share, the price dropped by 10 cents a share, to $9.90. If you had bought 100 shares, you'd only be down $10. If you optioned 10,000 shares, you will be out the entire $1,000 investment. Because the risks are high and most people are unfamiliar with option trading, an option tutorial can provide you with necessary information and preparation. Many sources are available to learn option trading.