Buy options,a brokerage,option trading brokerage rates in india - Easy Way

12.08.2014 admin
As your knowledge of puts and calls grows, you will want to consider trading strategies that can be used to make money in the options market.
Covering a call is the act of selling calls to someone in the market in exchange for the option premium. The focus of this article is the technique of buying calls and then selling them or exercising them for a profit.
In this article the term "trading calls" means first buying a call and then closing out the position later - such a strategy is called "going long" on a call. The key point, however, is that while both investments have unlimited upside within the next month, the losses on the options are capped at $300, while the potential losses on the stock could go all the way to $5,000.
Buying call options is a bullish strategy using leverage and is a risk-defined alternative to buying stock. Likewise, if the stock moved to $53 the day after the call option expired, the trader still would have lost all their premium paid for the option. When you're buying a call, you will be paying the option premium in exchange for the right (but not the obligation) to buy shares at a fixed price by a certain expiry date.


We will not consider selling calls and then buying them back at a cheaper price - this is called naked call writing and is a more advanced topic. While buying the stock would require an investment of $5,000, you could, with an option, control an equal number of shares for only $300.
Remember that buying a call option gives you the right but not the obligation to buy the stock, so your maximum losses are the premiums you paid. Because options allow you to control a large amount of shares with relatively little capital, they are used extensively by mutual funds and large investors.
Simply stated, when buying options, you need to predict the correct direction of stock movement, the size of the stock movement, and the time period the stock movement will occur; this is more complicated then stock buying, when all a person is doing is predicting the correct direction of a stock move. You'll also note that the break-even point on the stock trade is $50 per share, while the break-even on the option trade is $53 per share (ignoring all commissions).
Listen about currency options strategies involve a put or sell a call puts and put option with buy a previous trade options phrases such as low brokerage of. The popular misconception that over 90% of all options expire worthless frightens a lot of investors.


They believe this incorrect statistic and then conclude that, if they buy options, they will lose money 90% of the time!
Select the expiry month that you wish to trade the option in, and then click on the highlighted symbol that corresponds with the strike price you wish to trade at. In fact, according to the CBOE, about 30% of options expire worthless, while 10% are exercised and the other 60% are traded out or closed by creating an offsetting position.
When a stock price is above its breakeven point (in this example, $53.10) the option contract at expiration acts exactly like stock. Likewise, above $53.10, the options breakeven point, if the stock moved $1, then the option contract would move $1, thus making $100 ($1 x $100) as well. If the trader expects the stock to move higher, but only $1 higher, then buying the $52.50 strike price would be foolish.



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