Online Stock Option Trading

Stock Option Trading Basics

Call option: Buying a call option gives you the right (but not the obligation) to purchase 100 shares of a company's stock at a certain price (called the strike price) from the date of purchase until the third Friday of a specific month (called the expiration date). People buy calls because they hope the stock will go up, and they will make a profit, either by selling the calls at a higher price, or by exercising their option.

Put Option: Buying a put option gives you the right (but not the obligation) to sell 100 shares of a company's stock at a certain price (called the strike price) from the date of purchase until the third Friday of a specific month (called the expiration date). People buy puts, because they hope the stock will go down, and they will make a profit.

Online Stock Option Trading Tips

stock options trading involves far too many variables beyond your control. You must have an exit strategy planned out before you enter a trade. It's a way to manage risk. It's like buying car insurance. You're protecting yourself in the event of an accident.

Money Management: the true path to riches is to keep more money then you spend or lose. You will find it's rather easy to make money. The hard part is keeping it. Following a few money management rules will help you keep your options trading profits.

Go with the trend. Never trade against the trend. Bottom fishing does not work or you need a big amount of experience or luck to make it work.