Trading Options For Dummies – Overviews & Guides
Here trading options for dummies guides and terms you need to know. Some terms are very basic information on options. Proper terms and definitions will lead you to better understanding of specific terms that are widely used in trading options. In essence it allows an investor the power to act on his predictions.
For example, an option trader can make a lay a wager that in 3 months time a particular stock, that is named in the option, will be trading either below a certain price or perhaps higher than a certain price. What is interesting is that it is a “bit” that covers all the bases. Thus, if the stock trades solely between these two prices in 3 months, then in that case the trader will lose a predetermined amount, but if the investor is correct, he will stand to make good money on that “bit.”
As trading options for dummies it is great as a strategy because you believe that a particular market is going to move substantially, however, you are unsure of which way the movement will go. This is called a long straddle, because you will be making money if the market moves up or if it moves down.
This is basically the same strategy as mentioned above in Long Straddles, however it is usually for a long period of time than 6 months.
What is an option worth?
If you are dealing with trading options for dummies in the United States, then one (1) option contract corresponds to 100 underlying shares. Different countries will have different underlying shares.
How risky are options trading for dummies?
Actually it is one of the most risky traditions of investing in the market. This is because unless you know exactly what you are doing in the market, you stand to lose it all if things do not go according to your plan. Granted, the opposite is also true. Because it is so risky, trading options for dummies advises you that you should use an approved strategy until you may make up one of your own.
In order to minimize threats, you will learn to make technical analysis of the particular trading options that are before you. If you are not aware of the entire system and what it represents, trading options for dummies recommends that you may find online technical analysis means that are quite good and better yet quite affordable.
Long Call Option
A long call option is the easiest means to profit if you accept as true the hypothesis that the market will make a move in an upward manner.
Short Call Option
A short call option is a means to profit if you accept a true the hypothesis that the market will be making a move in a downward manner.
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