Trading Of Options Outperforms Stock Trading Courses
There are no stock trading courses that could have prepared a stock trader for the erratic and volatile market we have experienced over the last year. The up and down motions of the market indices exacted a toll on the large stocks and the smaller, weaker stocks were demolished.
Fortunately, stock option strategies offer solace that even the best stock trading course can't provide a" with options, you can profit when the market goes down. That's right a" you no longer need to rely on the fickle market's upward movement to bank big bucks.
The two basic stock option methods will allow the trader to make a larger amount of money then they would off of using the same amount of capital in a stock trade. The easiest options to understand are the call options. When the stock goes up, the value of the call options goes up as well.
When using a call option, the trader is allowed but not required to purchase the underlying stock at a specified price within a specified time range. The trader also has the option of trading the call contract itself or using it to purchase a favorite stock as a reduced price.
Call options are often referred to as 'surrogates' for stocks because you can benefit from the upward movement of a stock at a fraction of the price. However, the often overlooked profit player is a put option, which is also based on an underlying stock and increases in value when that stock goes down. You can also trade put options for the value they carry inherently, but they also afford you the right, but not the obligation, to sell a stock at a set price. That means you can sell a low-valued stock at a premium price.
You can also use put options as a form of insurance for the stocks you own. For example, if you purchase 100 shares of a $10 stock you spend $1,000. If the price drops to $5 per share then you lost $500. If you purchased a single $10 put option for those same 100 shares and the price fell to $5 per share, then you will have the right to sell the $5 shares for $10 each, thus negating your loss.
The stock trading mantra of 'buy low and sell high' has been around for years, the recent volatility of the stocks on a daily basis is not supported by any of the fundamental rules that supported the buying low and selling high of stocks. These erratic swings in share prices, however, give the options trader a terrific opportunity to profit greatly.
Online training with a basic brokerage account will allow you to make terrific profits from put and call options trading that the stock trader would not realize. Options are not limited to individual stocks either as you are able to trade options on the major indices as well as exchange traded funds (ETFs). This translates to your being able to trade an entire sector or index with less capital. Do not limit yourself to trading just stocks in today's volatile market by taking a stock trading class; increase your opportunities by adding options trading to your portfolio today!
Fortunately, stock option strategies offer solace that even the best stock trading course can't provide a" with options, you can profit when the market goes down. That's right a" you no longer need to rely on the fickle market's upward movement to bank big bucks.
The two basic stock option methods will allow the trader to make a larger amount of money then they would off of using the same amount of capital in a stock trade. The easiest options to understand are the call options. When the stock goes up, the value of the call options goes up as well.
When using a call option, the trader is allowed but not required to purchase the underlying stock at a specified price within a specified time range. The trader also has the option of trading the call contract itself or using it to purchase a favorite stock as a reduced price.
Call options are often referred to as 'surrogates' for stocks because you can benefit from the upward movement of a stock at a fraction of the price. However, the often overlooked profit player is a put option, which is also based on an underlying stock and increases in value when that stock goes down. You can also trade put options for the value they carry inherently, but they also afford you the right, but not the obligation, to sell a stock at a set price. That means you can sell a low-valued stock at a premium price.
You can also use put options as a form of insurance for the stocks you own. For example, if you purchase 100 shares of a $10 stock you spend $1,000. If the price drops to $5 per share then you lost $500. If you purchased a single $10 put option for those same 100 shares and the price fell to $5 per share, then you will have the right to sell the $5 shares for $10 each, thus negating your loss.
The stock trading mantra of 'buy low and sell high' has been around for years, the recent volatility of the stocks on a daily basis is not supported by any of the fundamental rules that supported the buying low and selling high of stocks. These erratic swings in share prices, however, give the options trader a terrific opportunity to profit greatly.
Online training with a basic brokerage account will allow you to make terrific profits from put and call options trading that the stock trader would not realize. Options are not limited to individual stocks either as you are able to trade options on the major indices as well as exchange traded funds (ETFs). This translates to your being able to trade an entire sector or index with less capital. Do not limit yourself to trading just stocks in today's volatile market by taking a stock trading class; increase your opportunities by adding options trading to your portfolio today!
About the Author:
TheScienceOfTrading.com provides 90 free minutes of videos on option trading tips and provides a complete and detailed option trading course for beginners to experts.
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