How To Trade Options
Jul0
There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.
There’s also a lot of hype about how complicated it is and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.
Lets cover a few of the basics about options and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.
When trading stocks your leverage is 1:1, if you go full out on margin you get get 1:2 leverage, but thats about it. With options it is not as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.
So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.
However the downside is that a big loss can also happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk.
What I’ve described above is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non-directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much less dependance on getting the stock direction correct, but it still matters.
So should you trades options?, in my opinion you should not do directional option trades until you become an expert stock trader 1st. This is because you really need to be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.
Whereas if you want to do non-directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.
Learning how to trade options is a very good skill to have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.
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Choosing Share Builder Is Simple
Jun0
If you are interested in buying and selling stocks online or you just want to start it then you better check out share builder.
A lot of investors are appealed to this share builder because the website offers different way to buy online stocks and it is make sense and simple.
It is easy to use and much cheaper than using a traditional broker. While these things are true of most online stock brokers, share builder is a bit different. It is actually much the same as an online option trading.
Share builder offers stock trades of any publicly traded company for $4 for any dollar amount you want to buy. This means you do not have to buy a minimum number of shares or even a round number of shares.
With share builder you can start off at any level you feel comfortable with as they don’t require you a minimum investment to start.
With share builder you can start investing right away, while with most sties they will require you to pu a minimum amount of money when you establish an account, which means you have to spend more money before you really invest. That is a good thing if you want to buy stock online with share builder.
No matter how much you purchase, the $4 fee is the same, so that it is worth buying larger amount directly if you can, because the fee will be much lower percentage of the overall cost.
It really make sense to consolidate your purchases of the same stocks all together since the $4 fee applies to each different stock, not to the total purchase.
In other words, it would be much cheaper if you buy $100 worth of one stock each week than buying $25 each of 4 different stocks each week for a month.
You would pay $4 a week in fees instead of $16 which would mean you would have $48 more invested by the end of the month. So, you’re interested in stock market, give share builder a try!
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