What
Markets to Trade
Here
you can learn which market to trade like Options, Stocks
and Futures. In fact, to be an intelligent investor it's
absolutely critical to have a broad understanding of all
avenues of investment available to you. Trading can be a
very satisfying way to make a living since you are your
own boss, and solely responsible for the decisions you make,
regardless of the outcome. Unfortunately this means if you
lose, there is nobody to blame; even if you empowered someone
else to make the monetary decisions, it was still your decision
to do so.
An options
contract is one that, in exchange for its premium (cost),
gives the buyer the right, but not the obligation, to buy
or sell an asset at a specified price from (or to) the option
seller within a specified time period, or on a specified
date. In this a put gives the stock or commodity
holder the right to sell, a call gives the right
to buy. One of the attractive things about stock options
is that the buyer cannot lose more than the premium paid
no matter what happens to the underlying stock, whereas
potential for profit is theoretically unlimited.
A futures
contract is an agreement to buy or sell an asset in
a designated future month at a price agreed upon by the
buyer and seller. The difference between a futures contract
and an options contract is that the latter gives the right
to buy or sell whereas a futures contract is the promise
to actually make a transaction. While options and futures
are viable supplements to stock investment, they should
not be used as a replacement to stock investing but merely
as investment alternatives.
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