Tag Archives: Stock Market

Beginners guide to Option Trading

 

option-trading

option-trading

If you are pursuing your career in stock trading, you should know all about Options Trading. With the help of a Stock Option, you get the rights to trade, which means you are able to sell and buy stocks at a given price and at a given period of time.

In the process of trading, you don’t sell the shares of stocks but just its rights. It can be quite risky because a trader makes a lot of profit from this business. When you start as a beginner, its important for you to know that there are two kinds of options. One is called Puts and the other one is called Calls. A Put option is the contract that gives the owner the right, but not the obligation to trade a stock at a price before the agreed time expires. A Call option gives the holder or bearer the right to buy stocks.

Options trading guide is also called Derivative guide since the value, which is based on an underlying stock or equity, that is to be traded is derived from something else. The index option in it works pretty well like the stock option that the derivative is also an index. It requires a contract because the Options are securities like stocks or bonds.

Beginners should also know that there are 4 participants in Options trading namely the buyers or holders for Calls and Puts and the sellers or writers of the Calls and Puts. It is important for you to know the difference between options and Stocks. Both are similar in many ways because they both have buyers who is bidding and sellers who is making offers. Both can undergo the process of buying and selling like any other form of security. The only difference between them is Options are derivatives that has an expiration date while stocks do not have limitations.

How can one liquidate his Option? You can do so through closing buy, closing sell or abandonment and exercising. The right time to liquidate is when the premium that is left costs lesser than the costs of the whole transaction.

Don’t feel lost amidst all the Options. Do a proper research and use the tools that will help to analyze the market behavior and think sensibly on what to do if there is a movement. Stock market is a very volatile market. Prices of shares of stocks keep on changing every now and then. With the help of Options trading, you can make your profits even if the market is fluctuating on a regular basis.

Euro goes down to 4 year low against US dollar although stock rise early

euro-vs-dollar

euro-vs-dollar

Euro bounced off the four year low in the early day although stock indexes have moved slightly up. Euro goes down to $1.2234 from $1.23 because of the growing fears about Europe’s debt crisis.

Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Morgan Stanley Securities, told CNBC.com that “People have no idea what it will take to get out of this situation, as they have seen the euro plunge despite a massive rescue package,”. He also told, “There are very big concerns about the eurozone.”

Trichet said in German newspaper Der Spiegel that, “In the market, there is always a danger of contagion — like the contagion we saw among the private institutions in 2008,”