Options Trading, is it Right for You?

admin 13 years ago

Do you invest your money? Are you one of those who watch the Dow Jones and cringe if it falls? I am learning about stock, bonds, trading, stock options, and all kinds of things. I am learning about options trading and stock trading. Buying stock in a company is pretty much like buying a piece of the company. When the company makes money, they pay dividends to the stockholders. Note that not all companies pay dividends. Stock options, on the other hand are more like contracts that let the purchaser buy or sell a stock at a fixed price within a specified period. If not used before that time then it is void. You can do options trading in several ways. One is exchange traded options and have standardized contracts. A clearinghouse settles the trade and guarantees the fulfillment by the credit of the exchange. Another example of options trading is between two private traders and not listed on an exchange. The over the counter trading can be arranged any way the dealers want. Every day on Wall Street, stock trading takes place. The entire arm waving and screaming you see on the floor of Wall Street is stock trading at its best. A specialist puts buyers and sellers together and the mandated price is how high the buyer will buy and how low the seller will go. The stocks traded are in no way connected to the company they were issued from. There is much to learn about stocks and options and the best advice is to learn all you can about stocks and then hire a brokerage firm.

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