Professional Answers on Investments
Insurance, Mutual Funds, Sensex, Nifty, Financial Planning
selling covered calls is the safest action. if you do it right you will never actually lose money;
you might forego some profit.
There are a lot of answers to your questions at
How do you trade them or how do you make money? Two different questions. If there’s something you don’t understand about trading options, you should ask a specific question. Your question is too broad, like asking “How do I drive a car?” There’s more to it than just buying one and would take pages to explain, trying to describe the different types when you might not know what a clutch is.
To make money with options you have to trade them in a margin account, like you would trade a stock. It is a very sophisticated trading strategy, highly leveraged, and very risky, not for the average investor.
Selling covered calls is a safe thing to do, but not very profitable because you’ve limited your upside potential, defeating the entre purpose for investing in the first place and doubled the cost of commissions. If the stock goes up really hard, you get it called away and you’re left holding the bag with nothing, instead of a gain.
If you want to be safe, buy a CD.
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Depends on how you like to trade and what fits your personality. Their are several ways people make money trading options, the beauty of options is how diverse they are and the only limit is ones creativity as far as what they can do in the options arena.
Personally I like to trade them like I would stocks for the most part. I use them for the leverage and never use a stop/loss point. I make small bets on any one given trade, as you can and will loss 100% of the money you invest when you are wrong if you have no stop/loss point. If you trade small and are good at picking stocks you will make money as long as you do not get greedy as far as taking profits is concerned. Learn proper money management as that is more than half the battle in any investing strategy you will employ.
I have found that simple strategies work best for me and no longer try the more complex option strategies one can employ. You may like the complex strategies, if so learn about them and test them out before you put real money on the line. Even if you consider your strategy simple I would test it out before you trade with real money.
In option buying you are having so many chances of making money if you are clear in your mind about the movement of price of underlying….if it is clear to you that the underling is going to move upside buy call option and if you are clear about downfall then buy put option.For prediction of future prices you just spent some 2-4 days in learning technicals …that’s all…there are so many sites providing free assistance in learning and providing free online assistance…you may send add request to ‘dhanvarshagrp’ at YIM for online assistance…
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