The share market is a common location for people to invest their money with the expectation of getting a better and higher return on their investment. Options trading is a financial market area that is incredibly simple for most newcomers to engage in. If you are one of those, who have never known about options trading, or you wish to know how you can make a profit, then do not worry, as we’re going to explain this in brief to you.
What is Options Trading?
For all those novices, options trading is the possession of the right to acquire or sell a predetermined quantity of stock at a fixed price in the future. When investing in options trading, you’re not buying a company’s assets or stock. Instead, you will be acquiring the ability to market or sell a company’s own or stock in the future. By learning the basics of options trading, you could start formulating your process of creating money. Let’s take a look at how you can profit from the options trading in National Stock Exchange.
- Add a Put Option
With the put option, you can get the ability to sell stock in the future at a particular price. This can be used if you think the company’s stock will decrease in the coming times.
- Add a Call Option
A call option is perfect to buy if you know that the company’s stock price is expected to increase shortly. For example, you buy 100 shares of XYZ with the call option, and these tend to have a strike price of $50 after 30 days from today. However, after 20 days, the price rises to $60. In such times, you can use the call option to turn around and sell your shares at $60.
- Implement Married Put Option
With the help of married put, you can implement the put option on your stock’s 100 shares. At times, the investor expects that the stock will decline in the short term but wish to pursue buying it because they suspect that it will grow dramatically. Therefore, in such cases, the married put protects the investor’s risk.
If you can see, there are a range of opportunities to make money by selling options. However, you must choose the best one for you.
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