For most people, their only exposure to the financial markets are through the banks, mutual fund and stocks (or shares as it is called in Australia/New Zealand). What they don't know is that you can make money using other financial instruments, and one that would not only limit you to profiting when the market goes up.There is also a way to make money when the market goes down, and this article will show you how.

Options are a great way to profit from a falling market. This financial instrument is based on an underlying stock or share, and is still related to the stock market. The definition of an option is that it gives the holder of the option the right to buy or sell a stock at a certain expiry date for a specific price. With options, you can trade this with or without an underlying share.Options have 3 basic elements that you need to know:

- Strike Price : This is the price at which you are willing to buy or sell the underlying stock or share

- Expiry Date : This is the date when the options contract would expire, and hence would be the day that would determine whether the contract will be exercised or will become worthless

- Premium : This is the amount that the contract buyer or seller will pay (for the buyer) or receive (for the seller) as part of entering into the options contract.

With options, you can use it to profit in many ways. One way is to make money by receiving premiums from selling an option. This is commonly done alongside holding the stock or share. Some people refer to this as "share renting", wherein you hold the shares and you "rent out" the shares and receive a premium. The other way is you can alternatively use options as a stop-loss measure, wherein if you own stocks and the stock price goes down, you can limit your losses by agreeing to sell at a specific date for a specific price, regardless of whether the stock price has fallen further or not.

This is just the basics of options trading. Now, you can get a bit more sophisticated from that in trading options. You can use options to trade without having to own the underlying stock! How? There are a few strategies that would let you do it, and I found this set of e-books from Planet Wealth that cover it in great detail. I can enumerate the ones I have been using to trade, and where I've produced some results, and they're mainly the credit spreads.

Since the falling market has been the main theme in the past month, I find those stocks that I have a bearish outlook on, and based on good ol' support and resistance levels, I find the good price to buy and sell call options to trade the downside of the stock. I have been successful with the trades since I started to do this, and this month I have already made 30% return from my trades. Not bad considering the banks won't even give you that as interest in a year!

Planet Wealth has been great in providing the knowledge on options, from the most basic concepts all the way to how to trade it, and they even have a live trading room that they offer so you can enter the market with confidence if you're a beginner! The guys at the trading room at Planet Wealth will show you when to get in, their reasons and rationale for entering the trade, and even guide you to entering the trade itself!

This is how I started to enter the options trading world. I was a total novice at financial markets, and I learned heaps more by just reading through Planet Wealth. It's the best investment I've made since, and I've already more than paid for the cost on my first trade, as it turned out to be a great winning trade (which is what we all want!) I absolutely recommend them to those who are serious in making money during these tough economic conditions, and even more when the markets start to turn up! Planet Wealth has the results to prove that it can deliver you profits in the marketplace!

Just to prove to you that options trading is the way to go, I'd like to share with you what I've achieved in the past few months with options trading, and this is trading the downside of the market. I shall make the company name XYZ in order for this to come out more objectively. I saw that company XYZ's share price was falling, and I heard a lot of bad news coming its way from the industry. I looked at the charts and saw that there is a resistance level of $31.

My trade then looked like this:

Sold Call Option @$32 strike price for Feb 09 @ $0.60 premium

Buy Call Option @ $32.50 strike price for Feb 09 @ $0.30 insurance fee.

The net amount for this trade came out to be $0.30. With options, you trade by lots of 1,000 in Australia, though it's lots of 100 in the US. Since I took 5 contracts or lots in this, I will have made $1,500 at the end of that month if the options expired, and the share price stays below $32. If this didn't turn our way, I would have lost $2,500 maximum from this trade. If you come to think of it, $2,500 risk for $1,500 return is a pretty high return! I was so pleased with this trade, to say the least!

I hope this has given you a good insight into the world of options trading! It is definitely a great way to make money in the current market situation.

To your many trading successes in the future!