Garth McCalister - Options Trading: A Complete Beginners Guide to Start Investing with Options Trading

Options Trading:

A Complete Beginners Guide to start investing with Options Trading

By Garth McCalister

Copyright 2019 by Garth McCalister - All rights reserved.

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Introduction

C ongratulations on downloading Options Trading: A Complete Beginners Guide to start investing with Options Trading and thank you for doing so. Options trading offers up a wide variety of benefits to traders of all shapes and sizes that make it superior to many other types of trading once you understand the basics.

Its not without its own unique ins and outs, however, and if you arent careful you could easily end up losing your trading capital with nothing to show for it. To ensure you dont end up losing your shirt, the following chapters will discuss everything you need to know in order to ensure you can take full advantage of all of the benefits that options trading has to offer. First, you will learn all about the basics of options trading and what to expect from this new type of trading. Next, you will learn about the two important types of analysis that you will utilize while trading options, fundamental and technical analysis.

From there, you will find a wide variety of starter strategies perfect for those who are just getting the hand of options trading. You will then plenty of tips for success and mistakes to avoid in order to ensure you get started as effectively as possible. Finally, you will find common questions about options trading answered so that you finish the ebook with a clear idea of what your next steps should be.

There are plenty of ebooks on this subject on the market, thanks again for choosing this one! Every effort was made to ensure it is full of as much useful information as possible, please enjoy!

Chapter 1: Basics of Options Trading

O ne of many types of securities, including bonds or stocks, options are a type of contract that gives their owner the opportunity, not the obligation to either sell or buy a specific asset for a specific price during a specific window of time. Additionally, it can be considered a type of contract that is binding is regards to a narrow group of properties and terms.

While the ideas behind them may seem opaque, they are actually used quite commonly in everyday situations. The basics behind options are frequently called into play when it comes to buying a house if the seller and the buyer negotiate an agreement that says the buyer will have the option to purchase the property at a set price in 2 months once they have raised sufficient capital. There is usually a fee associated with this, but then the buyer and seller are locked into the agreement no matter how the market changes in that period of time. This can be extremely good for the buy if the market fluctuates substantially in that time while also not costing them any risk as they have the option to not purchase if the deal would ultimately not work out in their favor.

It is important to understand that an option is simply a contract that relates to an associated asset which makes it a type of derivative which is any type of security that doesnt have innate value on its own. This includes things like indexes or stocks but not commodities. When employees are offered the opportunity to by company stock at a fixed point, that is another type of option. All told, every type of option can be divided into two categories those that are puts and those that are calls.

Calls make it possible for the person who purchased them to buy a given asset for a specific price and is similar to taking a long position on a stock. If you are purchasing a call then you are going to want the related stock to increase dramatically by the time the option expires. On the contrary, puts make it possible for their owners to sell a given asset at a specific price as long as it is sold prior to the expiration of the option. It can be thought of as a short position. If you own a put then you are typically hoping the market is going to drop before it expires.

Options are also classified as either European or American though the names have nothing to do with the location of origin. Rather, the rules or the two classes of options are different because American options can be exercised at any point prior to the time they expire and European options can only be exercised at the point and time they expire which makes them riskier, especially for new investors who can easily miscalculate market movement.