I want to let you in on a secret…

Wall Street doesn’t make most of its money from the stock market.

While trading equities constitutes a large part of “big banking,” if you were to add the value of all the stocks in the world it would only come out to $36.6 trillion.

Don’t get me wrong, that’s a big number. It’s also one reason brokerage commissions have been the bread and butter of Wall Street firms since the New York Stock Exchange was founded in 1817.

But the truth is there’s a much bigger market out there. This market, which is valued at over $790 trillion, has grown exponentially since the Securities and Exchange Commission deregulated it in the 1990s.

#-ad_banner-#Unlike most stocks and bonds, which tend to be “boring” and relatively stable, the securities in this market allow investors to make bets on the outcome of certain asset prices.

For instance, right now traders are betting $56,880 that the price of Apple (Nasdaq: AAPL) will be over $610 on March 22 — 21% above its recent price of $506. Investors in this market are also betting over $874,000 that Google (Nasdaq: GOOG) will be trading at $1,300 — or 26% above recent prices — on the same day.

If they’re right, those investments could be worth millions of dollars.

But odds are they’ll be wrong. While not impossible, it’s highly doubtful that two blue-chip stocks with market caps in excess of $100 billion will make a 20%-plus move in two months.

The far more likely scenario is that the securities those investors bought will expire worthless, and the money they spent to make these bets will go straight into the banker’s pockets. This process happens every day, and it’s one of the primary methods Wall Street uses to extract huge profits from some of its most aggressive clients.

But the best part about this market is that it’s open to everybody. You don’t have to be a multi-million-dollar hedge fund manager or a Wall Street guru to take advantage of it. All you need is a brokerage account and a few thousand dollars to get started.

I’m talking about derivatives — one of the most misunderstood markets in the financial community. Now, before you dismiss derivatives offhand, bear with me. It’s important to understand what they are, how they work — and more importantly, how they can work in your favor.

While derivatives might sound complicated, they’re really quite simple.

By definition, a derivative is any security that derives its value from the performance of another underlying asset (such as a stock, bond or commodity). The value of the derivative depends on whether the underlying asset goes up or down in price.

In other words, buying a derivative is like betting on the price movement of an asset. How much the bet costs, and how much it could potentially be worth, depends on the type of derivative that the buyer purchases.

So while derivatives might come with fancy names like “swaps,” “options” and “futures,” in reality they are often used like lottery tickets by speculators — whose winnings depend on whether or not the investor correctly guessed the direction of the asset price’s movement.

At this point I want to make something perfectly clear. We don’t recommend you make these speculative bets yourself. As we said, most investors who buy derivatives are aggressive traders willing to risk a small portion of their portfolio for the chance to earn huge profits.

That’s not how we like to invest here at StreetAuthority.

Instead, we prefer to be on the other side of the trade. That is, we prefer to sell derivatives instead of buying them.

After all, much like a state gaming board gets to keep the money for all the losing lottery tickets, derivative sellers keep the profits from each contract that expires worthless, which happens the majority of the time.

Specifically, one of our favorite derivative strategies involves selling covered call options.

Unfortunately, I don’t have room to tell you everything here about covered calls, but if you want to learn more, ProfitableTrading’s Amber Hestla has just released a brand new research report called “The Powerful Discovery Paying Investors $3,410 (or more) Every 35 Days.” In it, she explains how investors are earning up to an additional $35,000 a year by selling derivatives like covered calls.

She also includes the name of an under-the-radar pharmaceutical company that’s currently trading at a deep discount to its peers. Based on recent prices, the trade is giving investors the chance to collect $2,445 in income from a $5,995 investment. To learn the details of this trade, or to simply find out more about the benefits of covered calls, follow this link here.

P.S. — Make no mistake. The derivatives market is like a giant casino. There are thousands of investors making poor, speculative bets every day. But when you use that to your advantage with conservative strategies like covered calls, you can align yourself with the house. And the house almost always wins.