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.
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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