Options Trading: 6 in 1:
The Ultimate Guide to Investing and Making a Profit | Successfully Learn How to Get a Passive Income Using the Best Swing and Day Strategies and Maximize Your Earnings
Written by:
Nathan Real
OPTIONS TRADING
The Beginners Guide for Options Trading to Learn Strategies and Techniques, Making Money in Few Weeks. You Will Find Inside the A-Z Glossary All Technical Terms Used
FOREX TRADING
A Complete Guide About Forex Trading | Including Strategies, Risk Management Techniques and Fundamental Analysis
Stock Market Investing for Beginners
Learn How to Enter the Stock Market | Including the Best Platforms for Trading and Common Mistakes and How to Avoid Them
Day Trading Forex:
The Forex Basics Explained With All Trading Strategies. A Proven Method To Become A Profitable Forex Trader. You Will Find Inside The A-Z Glossary To All Technical Terms Used
Swing Trading
the Beginners Guide on How to Trade for Profits with the Best Strategies
and Technical Analysis. You will Find Inside the A-Z Glossary to All Technical Terms Used
Stock Trading for Beginners
An Easy Guide to the Stock Market with the Trading Strategy to Achieve Financial Freedom. You Will Find Inside the A-Z Glossary to All Technical Terms Used
Copyright 2020 - All rights reserved.
The content contained within this book may not be reproduced, duplicated or transmitted without direct written permission from the author or the publisher.
Under no circumstances will any blame or legal responsibility be held against the publisher, or author, for any damages, reparation, or monetary loss due to the information contained within this book. Either directly or indirectly.
Legal Notice:
This book is copyright protected. This book is only for personal use. You cannot amend, distribute, sell, use, quote or paraphrase any part, or the content within this book, without the consent of the author or publisher.
Disclaimer Notice:
Please note the information contained within this document is for educational and entertainment purposes only. All effort has been executed to present accurate, up to date, and reliable, complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaging in the rendering of legal, financial, medical or professional advice. The content within this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.
By reading this document, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, which are incurred as a result of the use of information contained within this document, including, but not limited to, errors, omissions, or inaccuracies.
Table of Contents
OPTIONS TRADING
The Beginners Guide for Options Trading to Learn Strategies and Techniques, Making Money in Few Weeks. You Will Find Inside the A-Z Glossary All Technical Terms Used
Written by:
Nathan Real
Introduction
Options trading is one of the most lucrative investments in the financial market today. It can help you grow your money over short periods of time, so you need to have a better understanding of how it works.
The options market allows you to trade at relatively lower costs and reduced risk levels. You may also make some passive income from the trade as you enjoy more leverage in terms of the number of shares you can trade.
When you visit the options market, you will be surprised at the wide array of opportunities you will come across. This is because you can make money both from the upward and downward movement of stock prices.
This book highlights the main things you need to understand before and during options trading. When you get to understand the purpose of options trading and how it works, you will be able to trade successfully on your platforms of choice. This will automatically result in better performancehence more income. You will be able to attain your financial goals faster as you also advance your trading skills.
If you are seeking to gain an in-depth understanding of what options trading entails, then this is the right book for you.
Chapter 1: Options Definition and Function
Apart from the popular financial instruments available on the market today such as stocks and bonds, there are other instruments known as derivatives. A derivative refers to a financial instrument that gets its value from other instruments or assets. One example of these derivatives would be options.
By definition, options are financial instruments derived from an underlying asset such as stocks or bonds. They present you with an opportunity to purchase an underlying security at a specific date and price. In other words, options represent contracts that allow you to buy and sell a certain value of an underlying asset at a particular price. Each contract specifies certain terms about the trade.
How Do They Work?
Options provide you with a very reliable way of investing in stock trading. Just like any other financial transaction, an options agreement or contract is made up of two peoplea buyer and a seller. An individual contract represents a number of shares of the underlying security. In most cases, one contract covers 100 shares of stock. The buyer always pays a certain amount against each contract as the premium fee. This amount is always determined by the type of underlying asset as well as the options strike price.
Traders often use options as a form of investment because of the limited number of risks involved in these derivatives. This is because options enable people to protect their real stocks from financial market exposure. However, care must be taken when dealing with options since, like any other trade, it is very easy to lose a large amount of stock within a fraction of time. They involve high profits, but may also result in high risks if not handled well. Despite this, many people consider options as one of the best and most reliable financial instruments on the stock market.
Options as Derivatives
As stated earlier, options are not real stock. They are derivatives whose price is determined by the price of the underlying security. Other examples of derivatives include futures, swaps, forwards, calls, and puts among several others.
Since options only represent a certain asset, the contract entered by a buyer and seller only offers you the ability to trade on the options market. An option call gives you the right to purchase an underlying security at a specific cost and time whereas a put option grants you the capability to sell on the market at a given time period and cost.
Each option transaction represents two sidesthe buying side and the selling side.
Selling of an option is also known as writing an option. Each side of an option transaction involves its own rewards and risks. When a person buys an option, it is said that they have obtained a long position; when they purchase an option, they have a short position. This applies to both call and put transactions.
In options trading, asset owners do not get involved in the transaction. Cash is only exchanged between the parties involved in the options transactions. Most of these transactions happen between investors, brokers, and market makers.
Types of Options
Options come in two major typesput options and call options. Traders choose the kind of option to trade-in depending on whether they want to buy or sell on the options market.
