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Stock Option Trading Information
The sort of stock option trading information that may be of use to you depends to a degree on your current experience and skill set. Beginners need stock option trading information regarding setting up a trade station, learning fundamental and technical analysis of stocks, and learning basic options strategies. More experienced options traders are more interested in stock option trading information that alerts them to the most profitable trades. Thus an experienced trade may subscribe to an alert service, attend online seminars aimed at more sophisticated approaches to trading. A beginner may start with the technical analysis of options using tried and true systems like the easy to use signals of Japanese Candlesticks. In this article we will focus on stock option trading information for beginners.
What Are Options?
Basic stock option trading information starts with the basic features of options trading, call and put contracts. An option is a contract between two parties. In trading stock options the contracts are standardized. Call contracts give the buyer the right to purchase a stock up until the expiration of the contract. The buyer pays for this right. The set price is called the strike price. This is the price at which the buyer will be able to purchase the stock that underlies the option contract. This price applies even if the market price of the stock rises. In fact, this is the expectation of the buyer. He expects the price to rise and locks in the price by purchasing a call options contract. The seller of a call option obviously does not expect the price to rise and expects to simply pocket the premium paid by the buyer. The opposite of a call contract is a put contract. In this case the buyer expects the price of the stock to fall. He purchases the right to sell the stock at the strike price which is specified in the options contract. If the price falls as expected he can sell the stock at a price far in excess of the now lower market price and pocket the profit.