The Basics Of Stock Options Trading
Stock options trading may sound complicated, but once you learn the fundamentals it is quite simple. Many investors prefer stock trading options as opposed to just buying and selling stocks. The reason for this is because it gives them more choice and less risk. When you purchase a stock outright, it can go up or down. You may end up making money or losing money. In the volatile world of finance sometimes there is just no way to predict which way the tides will turn, no matter how experienced you might be.
With options trading, you are getting the option of buying or selling a stock within a specified amount of time as stipulated in the contract between potential buyer and potential seller. During the time period, a transaction may or may not take place. Once the deadline has been reached the contract is over and neither party is required to do anything. It is interesting that in Europe, the expiration date is the only date a transaction can take place, but in the US a transaction can take place any time during the duration of the contract.
There are some acronyms that it helps to be familiar with if you want to trade stock options. One is ATM, which stands for at-the-money. This basically means that the price stays close to its original rate. OTM means out-of-the-money, and is when the price is too far off the strike price for the investor to profit. ITM means in-the-money and allows the contract holder to make money. These are just a few things you should know about stock options. Although they are less risky than other types of trading, options do carry risk. There is honestly nothing in the stock market that is risk-free.
To learn more about stock options trading, consider reading publications like the Wall Street Journal. There are also magazines dedicated to trading. And, there are books as well that can teach you about trading options. Examples include Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks by W. Edward Olmstead, Understanding Options by Michael Sincere and The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options by Mark D. Wolfinger. Any of these books and others like them can help you get a handle on the complex world of the stock market and options trading.
FINANCING OPTIONS: Gardnyr Michael Capital Helps Clients Take Advantage of . - MarketWatch (press release)
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Samsung says considering options for LCD business - Reuters
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No Good Option on Syria - The National Interest Online (blog)
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Stock Market Repeating Itself: Michael Ballanger Stock Market Repeating Itself: Michael Ballanger Source: Brian Sylvester of The Gold Report (2/13/12).. | ||
Apple Stock Hits $500, Setting New Record Apple's stock price topped $500 on Monday for the first time as investors continue to digest the company's stellar first-quarter results... | ||
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