Options trading is a really good way for investors to make profits from any market condition. The main idea in trading for every investor is to buy at the lowest price and sell at the highest yet it doesn’t work like that with options trading. Here everything is even simpler: a trader or the so-called investor can profit no matter if the stock market is going up or down. The most important is to make the right prediction concerning the movement of the value.
The next important step is to find a respective broker who would assist in executing trades on your behalf. Always remember that a right broker is a broker who is legitimate (has a right to offer financial services to people), located in a country where options trading is regulated by the state and different jurisdictions or has a license, offers a wide range of assets as well as high payout percentage etc.
There exist two kinds of stock options: the first type are stock options that are granted to employees by the company’s management with a certain discount whereas the second type are stock options concentrated on investors (call/put options).
Employee Stock Options:
More than 12 million people hold stock options and here are the reasons why they are granted with them:
- no matter how expensive or not these shares are, the companies want it employees to have a feeling of ownership;
- having some shares of a company, it is harder for an employee to leave the job/company;
- having some shares of a company, employees are more committed to it rather than a competitor company;
- buying some shares of a company, it improves and increases the company’s profitability;
Corporate Stock Options
There are two types of Stock Options, they are: Call and Put Options. Call Options give its owner a complete right to purchase shares for a particular price and within a certain period of time that is called expiration date. Whereas Put Options allow its holder to sell shares of a stock for a particular price by an expiration date.
There are many strategies proposed by different web-sites or certain people who assure of every-time-winning-strategies, which is of course not true. As options trading is always a 50-50% result, meaning that a trader/investor will either win everything (invested money plus additional payout) or lose everything (all invested money). Every trader is obliged to have his/her own strategies or concepts taking into account the following criteria: type of option, expiration date, type of asset, presence of a trusted broker, latest news and financial situations around the word etc. Knowing and understanding these and other important points will definitely lead every trader (professional or beginner) to winning.