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Friday, February 27, 2009
Stocks have been on a kind of wild ride for the past year, with volatility that no stock trading course could have prepared investors for. The up-and-down, whipsaw motion of the major indices has meant that good stocks have been hurt and bad stocks have been devastated.
Unlike the best stock trading courses, a stock option course will show you how to benefit from the down turns in the markets. You read that correctly- with the knowledge gained from taking an options trading course you can benefit when the market looses.
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.
A call option gives the trader the right to purchase a stock at a fixed price for a set period of time but does not obligate them to do so. The trader can trade the value of the options contracts or can use them as a vehicle by which to purchase a favored stock at a discounted price.
Call options are sometimes called "surrogates" because you can make more money while investing less capital. The put option is often overlooked but it can increase in value when the price of the underlying stock decreases. You can trade the put options for their value as well or use them to sell the underlying stock at a fixed price within a specified time window. In other words, with a put option, you are able to sell a lower priced stock for a premium.
Put options are also a form of insurance for stocks that you own. For example, suppose you have 100 shares of ABC that cost $10 each. If you purchase a single $10 put option for those 100 shares and the price of the stock drops to $5 per share, then the put option will provide you the right to sell the $5 stock at $10 per share.
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!
Unlike the best stock trading courses, a stock option course will show you how to benefit from the down turns in the markets. You read that correctly- with the knowledge gained from taking an options trading course you can benefit when the market looses.
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.
A call option gives the trader the right to purchase a stock at a fixed price for a set period of time but does not obligate them to do so. The trader can trade the value of the options contracts or can use them as a vehicle by which to purchase a favored stock at a discounted price.
Call options are sometimes called "surrogates" because you can make more money while investing less capital. The put option is often overlooked but it can increase in value when the price of the underlying stock decreases. You can trade the put options for their value as well or use them to sell the underlying stock at a fixed price within a specified time window. In other words, with a put option, you are able to sell a lower priced stock for a premium.
Put options are also a form of insurance for stocks that you own. For example, suppose you have 100 shares of ABC that cost $10 each. If you purchase a single $10 put option for those 100 shares and the price of the stock drops to $5 per share, then the put option will provide you the right to sell the $5 stock at $10 per share.
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 systems and provides a complete and detailed learning to trade options for beginners to experts.
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