Options service is that allows you to purchase and sell stocks, ETF’s within a specific date and price. This trading also gives flexibility to buyers to not to purchase any share or security at a given time or price. It is a form of contract that allows an investor to invest in security or ETF. Look for the
Best Option Trading Service for a good investment and less risk.It includes buying of shares called “Call option “ and selling of shares as “Put option “ .
All this process is done on the options market which trades Contracts. Options are not similar to stocks because they do not show ownership in a company . Options are less risky as you can withdraw your contract at any time, because there are many options traders, be smart to research ,before getting into this game . It is very important for investors to know about the ups and downs of the option trading before making a decision for investment..
Advantages Of Option Trading :-
1.They Provide Increased Cost Efficiency :-
It needs a low financial commitment .The cost of buying an option is quite less than a share. The investor has to pay very less out of pocket money, the investor who shelled out for stock is benefitted ,if the trade goes this way.
2. Option Buyers Have Limited Downside:-
When you buy or sell an option, you are not forced to follow on the trade. If in case your assumptions about the time and direction of the stock are not correct, you are at less risk because your losses are limited to your contract and trading fees.
3. Offers Build-in Flexibility -
An investor has many strategic options before an option contract expires –like
- a) buy shares to add to their portfolio.
- b) buy shares and afterwards sell some of them or all.
- c) Dispose off “in the money “ contract to some other investor.
4. It Helps An Investor To Fix A Price For The Stock :-
The option contracts allow investors to freeze the stock price ( the strike price) for a time frame. This means that it assures that before the option contract expires ,the investors can buy or sell the stock at the strike price. To make an example
BNHLF stock is trading at press time at $0.13, at the end of the contract the stock will be sold at $0.13 regardless of the market price BNHLF has reached.
Disadvantages of a Option Trading Services
1 Sellers Are Exposed To Losses:-
Like the buyers the sellers can incur losses much more than the contract fees. When an investor writes off he or she is obliged to trade at a fixed price and date as per the contract even if the rates are not favourable.
2. Short Term Investment :-
This service provides short term investment .The investors are on a dead line .They need to make two assumptions – pick up the right time to purchase the contract and when to sell the stock before the contract expires
3.Certain Requirements For Traders:-
Before trading with options, apply through your broker for approval .After knowing about your financial status, experience in investment and understanding of the risks of option trading, he will tell you about what types of trades you can walk in . An investor ,who wants to trade in options must keep at least $ 2000 in his brokerage a/c, which is a must.
4. Incur Additional Costs That Affects The Profit And Loss Results Of Investors :-
Selling call options on securities that you don’t own , need investors to set up an account ,if in case the trade is unfavourable for the investor. Every firm has a different requirement for margin accounts. If the brokerage account goes down due to the fluctuations in the market, the lender has a power to issue a margin call and withdraw from the investor’s a/c.
Conclusion :-
Many investors think that option trading services are adding complexity to their financial life, But if you really need to invest in these services ,explore the opportunities that options provide ,their trading strategies for beginners will help you withstand potential losses.
