I was invited to appear as a guest on CNBC last week for a segment on options trading strategies. The very first question the host asked was, "What are some of the options strategies you are focused on right now?"

I've personally used options trading strategies often in my nearly 20-year career in the investment industry. At times, I've used options to hedge my risk in existing positions, but I have mostly purchased both put and call options outright - making directional bets on individual stocks or market indexes.

In addition to the many options available on popular indexes today, there are also hundreds of exchange traded funds (ETFs) that now offer listed options. These new ETF options give traders more flexibility than ever before. While trading options is more speculative than purchasing mutual funds, ETFs or stocks - it's really not complicated at all - as long as you stick with a simple directional strategy of trading put and call options.

Options are Great for Playing Sudden Market Shocks

Perhaps the biggest advantage options have to offer is leverage, which can potentially boost your returns many times over. For instance, it's not uncommon to find attractive options trades where you have 10-to-1...50-to-1...or even 100-to-1 leverage on the underlying security. This means that even SMALL moves in the underlying index or ETF can mean BIG potential gains from your options.

That said - options aren't for everyone. They're more speculative than many investments, like mutual funds, but they're less risky than futures.

Here's a good rule of thumb when trading options: Only use money you can afford to lose because unfortunately, you won't always play the right option.

Discipline is the Key to Realizing Big Potential Gains in Options

However, if you follow a disciplined options trading strategy, you'll often be able to position yourself for double- and even triple-digit gains. These profit opportunities far exceed anything you're likely to earn from investing in blue-chip stocks or mutual funds.

Let me give you a very recent example of the profit potential in options that simply can't be matched by other investments.

Global currency markets have been on fire lately, thanks to increased volatility from the ongoing credit crunch. As a result, we've seen a bit of a "carry-trade unwind" that's boosting the Japanese yen's value against most other major currencies.

Just to give you an idea about the leverage-advantage of options that I discussed above, the value of the yen itself moved up less than 4% or so during this time, while the call option surged 139%! Jack also scored gains over 100% on euro put options in recent weeks too.

Go Yen, Go!

This gives you an idea of the big profits that are possible using a relatively simple, straightforward call and put buying strategy.

Tune in to my wealth comment in tomorrow's edition of the Offshore A-Letter when I'll show you where I'm finding options with the best upside profit potential right now.