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Finance Personal Finance Stock Options: Why You Need To Learn To Day Trade
Finance Personal Finance Stock Options: Why You Need To Learn To Day Trade
| Stock Options: Why You Need To Learn To Day Trade |
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| Written by Walter Fox |
| Thursday, 20 November 2008 09:24 |
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You can make your dreams of financial independence a reality. Many before you have used the stock market to become millionaires. Even in todayas current financial crisis that began with the downturn of the United States Banking industry and rippled through investment markets world wide, there have been those who have made money. The Dow Jones made the greatest one-day drops in history, yet many did survive this crisis to go on to make money in spite of the dramatic drops, and you can too. The news reported the drastic losses that affected many retirement plans because so many retirement plans relied on the stock market. Those who were following traditional financial theories of buying low and holding for the long term till the stocks have reached the maximum value and then selling, were hurt by this current financial plunge. What the news did not report was the fact that there were many investors that did not suffer great losses. In fact, there were those who had learned to utilize the short-term ups and downs of the market to their advantage. These are the people who have learned the skill of day trading. Day trading is an extremely profitable technique, but it requires dedication and lot of research. The more you know about what you want to invest in, the better your chances are for making money. Very few are able to pick a random stock, throw money into it, and make a hefty return. You might as well be shooting with your eyes closed. There are many techniques that day traders use to supplement their time and their investments. A key strategy that they use are stock option strategies. You can join the many who have learned to utilize stock options to make lots of money instantly. You own a stock and you put out a call option that your stock will go up to a certain amount. You are betting that the stock will either go up or down in this method. The other person is betting the opposite way. They give you a set amount of money that you will then be able to keep if your stock does not reach that price. If you win, you get the money they gave you and you still keep your stock shares. Put options are also a tool the day trader needs to utilize. This is like betting that a stock you own will go down in price. If the stock shares go down to the put price, they sell it to the other person. Yes, the investor looses on the price of the stock compared to the original purchase price, but it prevents them form loosing even more if the stock shares continue to drop. You need to learn how to make money both ways with these stock options if you want to maximize your investments. You sell a call option on the shares of a stock you own and you sell a put option for a lower price on the shares as well. When the stock goes down, you will collect money from the call option and the put option as well. You have just made money on your investment. Next you need to look at how the stock is doing and monitor your investment's performnance. Is it going up or down? You sell and buy options on stocks in increments of one hundred shares. Often investors buy many shares and sell options at the same time. You are hoping that the stock value will not work in either bets favor. If the stock does not reach either of the prices you set in the options, you get to keep the shares and the money. The rule of thumb is to always be smart with your money when choosing your investments. The goal is to make money, not lose it! First, learn to day trade. Second, do your research when investing in stock options. Donat buy a random company and then hope to make money selling calls. Calls and puts are tricky to learn. If youare buying the options, make sure you know the market trend and the company very well. You donat want to end up losing the money you bet with. Buy smart and you will make money! About the Author: TheScienceOfTrading.com provides 90 free minutes of videos on option trading tips and provides a complete and detailed option trading course for beginners to experts. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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