Concept of the Stock option trading was brought in 1970’s, and it then became very popular in 1980’s. But market losses at 1990 caused stop in this kind of trading, recent concept of the electronic trading or online trading made them popular once again to public.

Stock options are the options that make use of the stocks as fundamental instrument. Like all kinds, stock options are defined by using some related phrases, which are unique to the options trading markets. The Strike Price, as well known as the Exercise Price, is common word that is used to describe the stock options.

Strike Price is a fixed price where owner of the option will buy (‘call option’) or else sell (‘put option’) an underlying commodity. Call option and put option is a right to buy and sell about 100 shares of particular stock correspondingly.

It is not permitted to own puts and calls indefinitely. Expiration time also ranges from 1 month to 3 years, and lots of points in time and in between. All these periods will depend on which type of stock that they represent.

There are many risks coming with this stock options trading. One main risk is that customer is been obligated to trade in a strike price. That is, in case customer would like to purchase underlying stocks, then he should do that on strike price although an actual market price is lower than that. In the same way, customer has to sell all his stock at strike price although an actual stock market cost is far much higher. Only money, which is needed to open the trade, is deposit funds as well known as margin or else collateral. Main advantages as well include immediate dealing, Gearing, Interest & Dividend Adjustments. Most of the traders do not buy or else sell the breakouts and that is precisely why it is such powerful method. Direct exposure to commodities markets –value of all your investment may rise & fall in the direct proportion to price of an underlying commodity. Will you trade yourself or else will you use a robot in order to help you trade. The CFD trading robots have got some disadvantages & advantages; it depends on your profile, thus feel free to examine CFD Robots in a market. So educate yourself first, which does not necessarily mean spending thousands on courses, there are great educational sites, which give you lots of information free.

Last Updated: November 25th, 2020