Basic Understanding About Options Trading

Many people dare not trade option, and the major hindrance to them is that they feel that options trading is complicated with lots of strategy involved. Besides, option price is not as straight forward as stock price, it involves a series of calculation and formula. In fact, the one that come out with the option premium formula had gotten the Nobel Price for economic, they are no other than Myron Scholes and Robert Merton.

Though I agree that there is certain level of complication, but the advantages of option would have motivated us to learn more about options trading.

Basically, option is just a contract, this contract is the right for you to buy or sell the stock at certain price within certain time frame, but without obligation. You can imagine that option is just like an agreement between you and the seller of a house, this agreement is for you to purchase the house at certain price, but it has expiry date, and no body can be sure about the future price of that house.

The house price is $100k, it cost you $5k in order to draft out an agreement, and it said that from now until 6 months later, you can buy this house at $100k. You believe that the house price will go up within 6 months. 2 months later, the house price has gone up to $110k, some one (let's call him A) approach you to buy your contract because he does not want to buy the house with the total sum, therefore he will pay you $15k to purchase your agreement and he think that the house price will go up further within the next 4 months. 2 months has passed and the house price stabilized at $110k, A decided to sell his contract to some one (let's say B) at $15k. 2 month later, the house price has dropped from $110K to $80K. Instead of losing $30k, B made a loss of only $15K (which is the contract price) and the contract expired worthlessly by now.

Option to buy a stock is call option, and put option is to sell the stock. The benefit of option is the power of leverage, you have the right to buy or sell within that period of time without paying for the full amount. This helps you to minimize the risk.

The targeted stock price in option is strike price, it is also known as exercise price. If the stock is above the strike price, your call option is in the money, otherwise, your option is out of money. For put option to be in the money, the stock has to be below the strike price. The premium of the option is total sum of intrinsic and time value.

To learn more about option premium, please find out from Options Trading Academy. Always trade with your passion!

I love options trading and I am here to share my humble experiences so that you can be benefited from it. You can find out more from http://optionstradingacademy.blogspot.com/ Always trade with your passion! Cheers!

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2 Ways To Learn Currency Trading

Trading on the Forex market is a tricky and risky business. There are so many factors that influence the price of one currency in relations to another that it's very difficult to predict where the market will go. Add to that the fact that this is a global market which operates around the clock and sees 3 trillion dollars change hands on and you get a picture as to how complex this market is.

The truth about Currency Trading

The truth is that over 90% of all currency traders lose most if not all of the money they trade within a short time. The market is simply too tough on the little guys. But being a small trader isn't the reason why so many people fail. The reason is that most traders are simply ignorant. They don't know how to trade, how to read market data, and how to increase their chances of predicting where the market is heading.

Learn Currency Trading

The solution is to learn currency trading. It's worth it since the money making possibilities are remarkable. It's easier to make money on the Forex market fast than in any other way. But you need to know what you're doing.

2 Ways To Learn Forex Currency Trading

1. Go to a course - There are many courses which can teach you currency trading. They usually cost a few hundreds or thousands of dollars. This is still worth it because you can earn it all back when you're successful. However, these courses require you to go to class, learn with other people, and they usually spread over a few months.

2. Learn currency trading online - There are many online forex trading courses which can teach you all you need to know and do it at a fraction of what a live course would cost. These courses allow you to learn at your own pace and often contain detailed video tutorials and trading strategies.

Personally, I prefer online courses, but that is entirely up to you.

To read more about an excellent video online course, go to this webpage: Forex Power Strategies

To read more about currency course click here: Currency Trading Courses. John Drummond works from home. He writes often on business, trading, and finances. To read John Drummond's review of the 2 best Forex trading courses, click here: Automatic Forex Trading Software.

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