People get profits from real estate,gold or shares
when prices are rising.But, i like to introduce you an excellent avenue for
making money even if prices are falling.Make profit in any direction of the
market, whether it is upward or downward.Online trading in option contracts
provide us the chance of profit in positive and negative market
situations.
Options contracts are traded on stock
exchanges.but,we cannot buy options like buying a share.It is a bundle.It has
lot size,strike price and contract expiry date.Another thing is that each
option will expire on month end.In Indian markets,Options expiry date is the
last Thursday of each month.Strike price denotes the expectation
level of a trader.Different strike levels are available for trading.Normally,a
professional trader choose the nearby strike price of current market levels.
Options
may be based on market index or stocks.It is a derived product.Two types of
options available for trading are a) Call options and b) Put Options. Call
options help us to make profit in positive or rising market.Put options give us
profit in market crashes or negative situations.
Why professional traders choose
options trading?
1.Minimum capital requirement as margin money.
2.The percentage of potential return is
larger than shares, gold , real estate and futures contracts.
3.Daily fluctuations normally varies
from 10 to 100 percent.
4.Well suited for Day trading.
5.Can trade in indices such as Nifty
or S&P 500.
Demerits
1.Value of Options become Zero when
reaching expiry date.
2. Options are not good for investment
purpose due to time decay nature.
3. Trading in options is like a
game.Becoming a smart player is the most important thing.Even though,profit
potential of options are amazing if we compare it with other avenues.
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