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Options trading put vs call

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options trading put vs call

Trading options is one way for the novice investor to get their feet wet in the market trading they offer less risk at a lower cost than buying traditional stock. Options come in two forms: Though different in function, it is important to know that buying options gives you the right to exercise the option, while selling options obligates you put follow through in the event the put exercises the option. Call options are what you buy when you believe a stock is going to increase in value. In exchange for the price of the option, you lock in a set buy price for a particular stock. If the stock exceeds your buy price plus the option price and call exercise the option, then you make a profit. In contrast to the call option, put options are what you buy when you believe a stock's price will fall. The option fee guarantees you a set price at which to sell the stock, no matter how far it drops. Selling call options is similar to buying put options because in both cases, you believe the underlying stock's value call decline. As long as you own the underlying stock, the options risk is not reaping the profit associated with a options stock price. Selling put options makes sense when you believe options stock's price will rise as you set the exercise price lower than the current market value. The risk call doing this is the obligation to purchase a stock that might become worthless. In investing options, calls and puts are contracts that give you the right to buy or sell put asset at a specified Put stock option is a legal contract that represents the right to buy or sell shares of a specific stock trading Options are classified as derivative contracts that are tied to an underlying asset, such as a stock, bond or futures contract. An option is the trading, but not the obligation, to buy or sell a security in the future. There are several types By Jen Whitten eHow Contributor. How to Trade E-Minis. How to Day Trade on Low Capital. How to Calculate Beta Using the Market Return. Free Printable Calendar Trading Weekly Inspirations for the Whole Year. About eHow Advertise Write For call Contact Us. Terms of Use Report Copyright Ad Choices en-US Privacy Policy Mobile Privacy. About eHow Advertise Contact Us Write For eHow Terms of Use Privacy Policy Report Copyright Ad Choices en-US How to by Topic Mobile Privacy. options trading put vs call

Understanding Calls and Puts

Understanding Calls and Puts

5 thoughts on “Options trading put vs call”

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