5 Reasons Why Options Trading Better Than Stock Trading

Submitted by: Jason Ng

Options trading has been the centre of much debate of recent years. Is options trading dangerous? Can we go bankrupt on Options Trading? Indeed, options as a form of derivative instrument is far more complex than the stocks that they are written based on and, like a wild stallion, can hurt you if you do not understand how it works and how to use it properly. 

This brings us to the topic of this article. 

In this article, I shall present 5 reasons why options trading is actually better than stock trading in order to dispel the age old myths of how dangerous options trading is. Let’s remember this: Options trading is dangerous only when you do not understand it. 

1) Variable Leverage 

The leverage that options trading give you is perhaps the main reason why people gravitate to options trading in the first place. Leverage is the ability to do more with the same amount of money. Trading options allows you to make a lot more profit on the same move on the underlying stock. When you buy the stock itself without margin, you are merely making 1% profit on a 1% move in your favor. However, in options trading, you could be making 10% profit on that same 1% move the stock made or even up to 100% on that same 1% move! 

Yes, the beauty of leverage in options trading, unlike in futures trading, is that it is VARIABLE! 

Leverage in options trading is variable, you could take on more leverage for more risk or lesser leverage for lesser risk by choosing options of different strike prices and/or expiration month. In general, the more out of the money options, the higher the leverage and the more in the money options, the lower the leverage. 

Leverage cuts both ways. This is why the beauty of leverage in options trading is that it allows you to do the same trades with much lesser money, as such, you could simply use only money you can afford to and intend to lose in any failed trade for each options trade so leverage actually help you control your losses instead! 

2) Low Capital Requirement 

Apple Inc. , AAPL, is trading at $295.36 today which means it takes $29,536 to buy 100 shares today. However, AAPL’s at the money call options costs only something like $715 to control the

profits on that same 100 shares of Apple! 

3) Bet Downwards Without Margin 

In order to profit from a downwards move on a stock in stock trading, you could only short the stock which incurs margin. However, in options trading, all you need to do in order to bet on a stock going downwards is to BUY its put options with no margin needed at all. That’s right, buying put options for profit to downside works exactly the same as buying call options for profit to upside. There is no need to own the stock beforehand and there is no need for margin! 

4) Multi-Directional Profits 

In stock trading, you only profit when the stock goes in the direction you want it to. Upwards when you buy the stock or downwards when you short the stock. There is no way to profit in both scenarios simultaneously and there is no way to profit if the price of the stock does not move. However, in options trading, such multi-directional profits are possible! There are options strategies that allows you to profit no matter if the stock goes upwards or downwards quickly and there are options

strategies that profits even if the price of the stock remains unchanged! Such is the real magic of options strategies which greatly increases your chances of winning in options trading versus stock trading! 

5) Play Banker 

Sick and tired of always being at the player’s side of the table? In options trading, you could switch instead to the banker’s side of the table and do what market makers do by selling options to people who are wants to take the side of the player! When the players lose, as they often do, you get to keep

the bet as profit just like a real banker! Only options trading has the “bet” which you get to keep and it is known as “extrinsic value”. 

As you can see by now, options trading is indeed far more powerful and safe than stock trading if you do it correctly. To learn more about what you can do with options, visit our Options Trading website at Optiontradingpedia.com .

About the Author: Jason Ng is the Founder and Chief Option Strategist of Masters 'O' Equity Asset Management and author of http://Optiontradingpedia.com and http://Futurestradingpedia.com.

Source: https://www.isnare.com

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Rich Options Trading, Poor Options Trading

Submitted by: Jason Ng

After reading the book “Rich Dad Poor Dad” by Robert Kiyosaki, I came to realize that not only is there a rich and poor path in life but also a rich and poor path in options trading as well. Many options traders experience defeat in their options trading career, especially during the first few months, because they are unknowingly walking down the poor path in options trading. There are many differences in the approach winners take in options trading versus the losers and we shall outline and explore some of these in this article. 

Rich Options Trading : 

1. Speculative directional options trading using direct call or put options buying only with a small percentage of their fund and only on the stocks with the best chances. 

2. Extensive use of Option Greeks in order to dynamically hedge a position when conditions change. 

3. Always doubt one’s own conclusions and make provisions for losses. 

4. Always have a stop loss policy already in place or in mind. Stop loss points can be in the form of contingent orders or trailing stop orders. 

5. Understands the exact options trading style that suits them. Emotional options traders should stay out of day trading. 

6. Know that there is no one best way to trade every single situation. 

7. Do not chase after profitable trades that have been missed earlier on. 

8. Satisfied with a steady, consistent gain. 

9. Into options trading for the long run. 

10. Think options trading education for a start. 

11. “Trades” the market. 

12. Keeps a trading log. 

13. Learn from mistakes. 

14. Understands technical and fundamental analysis. 

Poor Options Trading : 

1. Speculative directional options trading using direct call or put options buying with all their money hoping to hit a “big one” on stock picks taken from the TV or non-professional friends.  

2. Has no idea what option greeks are at all. 

3. 100% confidence! Full steam ahead! 

4. Realize it’s too late only when it’s too late. 

5. Follow whatever options trading style that is supposed to produce extra-ordinary gains only to completely break the rules and your pocket. 

6. Stick to only one way of options trading for all market conditions and situations. 

7. Missed a trade, watched the price go up and then enters it at that new high price only to see prices tumbling like a rock thereafter. 

8. Always looking for ways to make more explosive gains from stock options only to have the dynamite eventually exploding in their face. 

9. Start options trading with the purpose of quitting after hitting a big profit. 

10. Think money making for a start. 

11. “Plays” the market. 

12. Forgets the last trade made. 

13. Hates mistakes and tries to forget mistakes. 

14. Mystifies and follows technical analysis superstitiously. 

Well, as you can see from the list of differences above, the difference between rich options trading and poor options trading is not only a matter of technique or method but also a matter of attitude and mental approach. Only when the right mind meets the right technique does rich options trading happen. Are you making any of the mistakes that poor options trading makes?

About the Author: Jason Ng is the Founder and Chief Option Strategist of Masters 'O' Equity Asset Management (http://www.mastersoequity.com) and author of http://www.optiontradingpedia.com. He is a fund manager specializing in options trading and his revolutionary Star Trading System has helped thousands. 

Source: https://www.isnare.com

Permanent Link: https://www.isnare.com/?aid=332327&ca=Finances

If You Are New In Binary Option Trading

Jordenwong

Platform which offers high payout on every trade and a big sign up bonus makes sure that you get a big boost in the beginning.

In finance, a binary option is a type of option in which the payoff can take just two probable outcomes, either some fixed monetary amount or nothing at all. There are two central types of binary options obtainable to one person, first is the asset-or-nothing binary option, and the second is the cash-or-nothing binary option.

In the former option, the payoff is equal to the asset’s value, as long as the asset’s price goes above the strike price. If the cost of the asset remains lower than the strike price, then the option runs out and becomes insignificant. In the latter, option is to some extent like an odd option, whose payoff is a preset amount if the cost of the original asset reaches, and in some cases go beyond the strike price. And again, if this does not occur, then the payoff would be zero.

Now, naturally, unless someone is from the finance industry or has a finance background, they would not be able to comprehend a single word about the binary option. So for them, first know this; a binary option is a type of trade investment. Just like investing money on stocks, people can invest in the binary or digital option. Moreover, just like, we have traders or brokers who help customers buy stocks, there are binary options brokers who work in this field.

Therefore, if you are interested in this type of investment, then there are some sites, which allow you to do so yourself. Here are a few tips on how you can go about with this.

• Since you are new to this kind of investment, it is advised that you choose a website that has a particularly user-friendly interface. Some of these websites have put in a lot of effort in making sure that the interface’s processes are fast and sensitive. What is more is that they offer their users with comprehensive training materials, which are filled with useful information that let them, learn about these things.

• Some sites have a trading platform that is entirely web based and thus, you do not need to download any additional software or such. All you have to do is create your account at their site and you are ready to go. If you are new at this, then as I’ve said before, you’d get the needed materials to know how it all works. So now, you can trade from anywhere, and at anytime.

• Their main plan is to aid you in tying together the market to your profit, in order to turn you out to be a more complete, aggressive, and well-paid binary options brokers. And they hope that with every trade and investor that they have they can build and deliver a significant trading market.

Article Tags: Binary Option, Binary Options, Strike Price

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR

Know the inside knowledge of financial marketers to earn profits. Trade safely and successfully with best binary options brokers. Visit the website & create a free account to become a profitable trader.

Binary Options: What is Binary Options

Binary options is nothing more than betting on price fluctuations in the price of particular options. If your assumption happens, then you win a predetermined sum of cash, similarly if you take the wrong position, then you lose your entire investment. 

Investors decide that the value of a certain investment will either go down or up. Other than that, they can guess that the stock to reach a certain high or low for a time range.

The most popular form of binary options are call/put options because the investor need only bet on whether the options will rise above or fall below the active trading price within a certain time period.

Binary options are traded online in a number of websites. Some of them are fraudulent in nature so investors should select the safe websites which are those supervised by the Securities and Exchange Commissions (SEC). 

Once the investor decide the website to trade binary options and how much to invest, then the next step will be deciding which options to invest in. The new investors may want to start with call-put options because they are really easy to work with.

Binary options are much easier in nature than most other investment options. Generally there is no need to hire a broker to handle the trading. Because betting that particular option will rise or fall in nature is much easier to do than assessing the future value of hedge funds, mutual funds and stocks.

Also the fact that the minimum investment amount is quite loqw, making the binary options very atractive and open for everyone. For more information on investing in binary options, you can click on the banners around this page.

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