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im a beginner in the options market.can someone help?
4 Answers
- 1 decade agoFavorite Answer
There is a lot of info out there on the web. Do a search on what you specifically want to know about. Also check out optionetics.com I read that site, and subscribe to their weekly newsletter.
Options are great for getting a good bang for your buck. If the stock price goes up 3% in one day, a call option could move 25% that day, or more. The same with price down moves when you are holding a put option. They are also a good way take a long term position in a stock, or commodity. Like buying a call option on gold that expires in January. Now, many people will speak of options as though you have to exerise them, meaning that when you buy a call option, you get the right to buy the stock at a certain price. But you don't have to exercise it. You can trade it when the price of the option itself moves up, like I mentioned above. For example, you buy a call option on Apple Computer at a price of $3.00, which costs you $300 (it's x 100 because an option contract controls 100 shares). When the option moves to $4, you can sell it, and you would have made $100, or a 33% return on you investment. If you would have bought 5 of them, you would have made $500 on a $1500 investment. Think how much time it would have taken for the stock price to move 33%, when you opitons can do that with a 5% move in the stock price. It's due to the leverage aspect of the option contract that makes it more volatile. Of course that volatility goes in both directions.
- Anonymous1 decade ago
It would help to know your overall experience. Are you an experienced investor just moving into speculation for the first time? It is very easy to lose all your money in options if you don't know what you're doing. I suggest you read some books first, and look into a good advisor. Try http://www.wavestrength.com/ they are technical analysts and they have some free reading on thier site. Do some research before jumping into speculation, the waters can be quite treacherous.
- 1 decade ago
Do not trade options unless you are extremley experienced or are using them to hedge a position you are currently in. If you do end up trading options despite this, good luck, but I hope you are not too attached to your money.
- Anonymous1 decade ago
I can help: stay away from options with any money you cannot afford to lose.