Basics of options trading.

 

What Is Options Trading?

Options trading is a lot different from investment or mutual funds, but it can come with real advantages and disadvantage for investors. But what is options trading? In this article, we'll take a look at what is option trading?

     Options trading is the trading of instruments that give you the right to buy or sell a specific security on a specific date at a specific price.

The Different Types of Options:

Calls: When the price of particular stock going up you got profit.

Puts: When the price of particular stock going down you got profit.

Vice varsa.

The Different Types of Option Traders:

Options buyers: They are the person who buy an option like call buyers & put buyers.

Options seller: They are selling options.

Note:In stock market option seller are more profitable 67% and option buyers are only 33%.

Advantages and Risks of Trading Options:

Like others investment options trading also have benifit and drawbacks.

Benifits:

. smaller amounts of capital needed.

. more profitable than investment and mutual funds.

.less time needed to make profitable money.

Drawbacks:

As you know if there is a profits it also have more risk and difficulties.

Options Trading Strategies to Know Before You Start Trading:

Covered Calls 

A covered call strategy has two parts: You purchase an underlying asset. Then you sell call options for the same asset. As long as the stock doesn’t move above the strike price, you can realize profits by selling call options for the assets you own.

Married Puts 

A married put strategy involves purchasing an asset and then purchasing put options for the same number of shares. This approach gives you a measure of downside protection by allowing you the right to sell at the strike price.

Long Straddle

A long straddle strategy involves buying a call and put option for the same asset with the same strike price and expiration date at the same time. This approach may be used when an investor is unsure which way prices for the underlying asset are likely to move.

Things to Know Before You Start Options Trading:

If you’re interested in beginner options trading, keep these factors in mind as you get started.

1.Options trading is all about calculated risk.

2.Options trading starts with your financial goals.

3.Options trade on different underlying securities.

If you want to trade in options in your mobile or laptop then you should open a trading and investment app.There are several app which provides you a good brokerage platform.