If you’re new to the trading game, you might be wondering about the advantages of trading options over stocks — or vice versa.
When you purchase a stock, you own a small portion of that company. And that’s whether you chose to buy that stock because you believe its value will rise over a period of time…
Or that the company will become more valuable.
However, trading options is quite different. In fact, it’s best to think of options as what they’re referred to by most traders… derivatives.
Options are contracts that give you the right to buy or sell the stock at a specific strike price by an expiration date. Strike prices are directly linked to the price of the stock they represent.
But like with everything in the stock market, there’s always going to be a downside. So the key is figuring out which style of trading presents the greatest advantage for you…
In 1973, Wall Street got a lot more interesting when options trading was introduced. The rest, as they say, is history.
Options trading can offer a dependable hedge… along with the potential for unlimited profits. But you have to understand what’s going on in the market if you want to see any type of success.
When it comes to trading options, the advantages of it will always outweigh the cons — especially when compared to trading stocks.
When most new traders think about stocks, they’re usually thinking of penny stocks, which are volatile). Or they think of day trading,where you need a massive account over $250,000 — and trading is still risky!
Now let’s look at how buying options would go… The max amount of money you can lose is the initial amount of money you pay on the premium, and traders don’t need some huge account — you can start with as little as $2,000!
Watch the video below to see the major advantages of trading options over stocks, and share your thoughts and questions in the comments below. As always, leave your thoughts in the comments below, and don’t forget to subscribe to my YouTube channel to stay up to date with all things options trading.
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