|
| |
What is Options Trading?
Much like stocks, options can be used to take a position on the market in an effort to capitalize on an upward or downward market move. Unlike stocks, however, options can provide an investor the benefits of leverage over a position in an individual stock or basket of stocks reflecting the broad market. At the same time, options buyers also can take advantage of predetermined, limited risk. Conversely, options writers assume significant risk if they do not hedge their positions.
An option is the right, but not the obligation, to buy or sell a stock (or other security) for a specified price on or before a specific date. A call is the right to buy the stock, while a put is the right to sell the stock. The person who purchases an option, whether it is a put or a call, is the option "buyer." Conversely, the person who originally sells the put or call is the option "seller."
Options are contracts in which the terms of the contract are standardized and give the buyer the right, but not the obligation, to buy or sell a particular asset (e.g., the underlying stock) at a fixed price (the strike price) for a specific period of time (until expiration). To the buyer, an equity call option normally represents the right to buy 100 shares of underlying stock, whereas an equity put option normally represents the right to sell 100 shares of underlying stock.
The seller of an option is obligated to perform according to the terms of the options contract-selling the stock at the contracted price (the strike price) for a call seller, or purchasing it for a put seller-if the option is exercised by the buyer.
Long Call Risk Profile
The price of an option is called its "premium." The potential loss to the buyer of an option can be no greater than the initial premium paid for the contract, regardless of the performance of the underlying stock. This allows an investor to control the amount of risk assumed. On the contrary, the seller of the option, in return for the premium received from the buyer, assumes the risk of being assigned if the contract is exercised.
In accordance with the standardized terms of their contracts, all options expire on a certain date, called the "expiration date." For conventional listed options, this can be up to nine months from the date the options are first listed for trading. There are longer-term option contracts, called LEAPS, which can have expiration dates up to three years from the date of the listing. American-style options (the most commonly traded) and European-style options possess different regulations relating to expiration and the exercising of an option. An American-style option is an option contract that may be exercised at any time between the date of purchase and the expiration date. Conversely, a European-style option (used primarily with cash settled options) can only be exercised during a specified period of time just prior to expiration.
Learn Options Trading at Online Trading Academy
We are the place to learn options! We will educate you in all aspects of the options trading arena, using the latest tools and software. You will learn how to use strategies for consistent earning, portfolio protection (hedging) and speculative income. You will learn how to find, verify and trade Intermediate and Advanced strategies. Decide for yourself which is the best instrument for you – Stocks or Options. Don’t be surprised to find that you can use BOTH in harmony. Learn to trade with discipline, a real plan and the technical tools that work for you.
Options Trading Courses Curricula
Options Trader Part 1
Options Trader Part 2
|
|
Testimonials
"Of all the classes and seminars I've attended in the last 5 years this is the one that brought it all together for me so I can intelligently select a strategy for the market conditions and quantify my risk vs reward. It helped me understand how the greeks affect my trades and help me to identify why my trades haven't been working as I thought they should in the past. I thought I knew what I was doing from past trainings but realized I had been missing several pieces of the puzzle until now, I expect this to make a big difference in my future trades. Definitely the best option class I've ever taken (and I've taken alot of them over the years). If you've been trading options and not making money you need this class."
Rick C., November 2008
"I have been trading options for years and always take a neutral position with far out of the money naked puts and condors, so I feel very excited about implementing supply/demand into the equation to predict better direction. That is what every trader needs to know. "
Shane M., January 2008
“Online Trading Academy’s option trading course helped me develop a more complete understanding of option trading and a breakthrough of my current trading style and strategies. No matter if you want to trade part-time or full-time in option trading, attending this class is a must toward success.”
John H., March 2007
"The 2-day Professional Options Trader class covered the fundamentals and advanced strategies that teach beginning and seasoned traders to take advantage of the leverage and risk management afforded by options. This ultimately results in the discovery of an instrument that allows the trader to profit in all types of market conditions. The instructor's floor experience coupled with his use of real-world analysis and trading tools, helped crystallize the process of selecting an options strategy and executing the trades. I strongly recommend this powerful and time effective course."
Frank L., January 2004
|
|
|
