Stock Option Trading
An option is a right to purchase or sell some shares within a specific period of time. If traders purchase a "call" they suppose that the stock price will rise and if purchase a "put" they believe the stock price will fall. When individuals purchase a call it is termed as going "long" and a put is termed as going "short." Call options give individuals a right to buy the underlying asset, the real stock and put options give a right to sell the underlying asset, the actual share. If the option is put into effect, individuals have to buy the underlying security at the share price.
Termination period of options is generally the third Saturday of every month, subsequently the option expires worthless and the investors lose their right to buy or sell the underlying security at the specific price.
Stock market option trading is a source of income for many people. Individuals can indulge in stock option trading to shield themselves, such as an insurance policy against losses and can also be utilized to secure profits if they are traded correctly. Stock options trading offer investors flexibility and power to protect their stock portfolio or make more investment profits. Even though stock option trading offers several investment benefits, they are not intended for everyone. Much like the returns that can be large, the losses too can be huge. A lot of information must be processed prior to taking any decision regarding stock options trading.
Stock option trading is more intricate compared to stock trading, as traders have to choose from various variables, in addition to the direction they believe the market will move. Careful consideration and sound capital management techniques are a necessity for successful stock option trading.
Related Tags: stock trading, stock trading systems, online stock trading, option stock trading
Stock Trading provides detailed information on Stock Trading, Online Stock Trading, Option Stock Trading, Stock Trading Systems and more. Stock Trading is affiliated with Swing Stock Trading.
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