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strategies you can use in stock option strategies
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[QUOTE="Oluwasegun purpose, post: 241131, member: 73877"] [B]1 call option in case of rising stock price As an owner of an option you have the right to exercise the option before it reaches its expiration date... options are beneficial since they allow for the selling or buying of securities no matter what the current market price is... as he results different techniques can be applied to take advantage of this option characteristics.. For example, if you expect an increase in the price of a stock, you can purchase a call option at a price that is near the current market price.. if your expectations are met and the price really increases, you can exercise the option and purchase more shares at the lower price stated at the option contract.... After after this you have several options, one of them is to sell the stock and enjoy the profit.. another alternative is to keep the stock with the accumulated awards... 2 put options as a protection against losses Options are often use as a protection against losses.. this is especially true if the owner expect that the price of the stock is about to fall... A useful tools in times of falling stock price is the put option.. it allows investors to protect their assets from the declining prices.. Under put option is set at a price that is art or just below the market price.. so, to a great extent you look the price at this level and if a decline follows, you have the right to sell a stock at the price stated in the put option contracts thus, if the price of the stocks really fall, you can exercise the option and sell at the predetermined higher price and enjoy the profit..you can also reduce your cost basis in the stock by selling the put option... However , if your expectations of a fall in price and not met, you will incur losses equal to the amount of money you have paid for the action 3 profit from stock options trading[/B] Another activity you can apply with options is to trade it , without taking possessions of the security that are include in the contract.. in order todetermined the price of an option many factors and considerations are involved.. however, there are two basics aspect involved in the option price setting . the first one is the fact that the price of the stock options is directly influence sale by the price of the stocks that are included in the option.. A movement in the price of the underlying securities lead to a movement in the price of the option another factor that greatly affects the price of the options is the time period until the expiration date.. with the nearing of the expiration date , it's price tends to fall since it become less attractive to investors..... [/QUOTE]
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strategies you can use in stock option strategies
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