can any investing guru eduacate on stock trading and option trading which is superior?
difference between stock trading and option trading
There is no such thing as a superior educator, there is only superior students. Are you one of those who excel in anything that you do? That is the most important question to answer. If you are the kind who do not have the persistence nor intelligence to excel in anything you do, then you won’t be a good options trader no matter who educates you.
Stock and options are two different instruments altogether. Options are contracts that allows you to buy or sell stocks. These options contracts comes with a price and moves with the underlying stock to varying degree. In this sense, buying options is not the same as buying stocks.
Superior in what way?
Option trading is easier to get into, due to lower cost, but since it’s basically a "leverage", incurs huge risks.
Stock trading is somewhat less risky when compared to options.
If you don’t know what to do, don’t invest. LEARN LEARN LEARN, do paper-trade until you are comfortable.
Think of it this way: there is no "minimum competency test" for investing, unlike there is for driving. There is also no required safety equipment/arrangement for investing unlike driving. Thus, if you choose to jump in, you will have to know what you’re doing. After all, you wouldn’t try to drive a Formula 1 car without a LOT of lessons, right?
References :
stocks don’t have any expiration dates, options do.
With options there is more leverage, buying stocks on margin there is more leverage.
Cash purchase of stocks, there is a limit to the total amount of stock to buy, so there is no leverage.
References :
There is no such thing as a superior educator, there is only superior students. Are you one of those who excel in anything that you do? That is the most important question to answer. If you are the kind who do not have the persistence nor intelligence to excel in anything you do, then you won’t be a good options trader no matter who educates you.
Stock and options are two different instruments altogether. Options are contracts that allows you to buy or sell stocks. These options contracts comes with a price and moves with the underlying stock to varying degree. In this sense, buying options is not the same as buying stocks.
References :
http://www.optiontradingpedia.com/differences_between_stocks_and_stock_options.htm
Hello. Very good question.
A major difference between stock and option trading is with regard to the nature of the two strategies.
When going long (buying) stock, a trader or investor actually owns something. He or she can take advantage of all the benefits that are associated with stock ownership, such as voting rights.
Remember, when buying or selling options you don’t actually own anything. When trading options, one is in effect just trading rights and obligations, nothing more.
To answer your question regarding the superiority of one strategy over the other. It is important to realize that some of the most powerful stock and option strategies are the ones used in combination with one another.
For example:
Buying a stock and purchasing a put option, also known as a protective put. The "put" acts as insurance to protect the long stock position against a decline in price.
Or buying the stock and selling an (OTM) out of the money call, also known as a covered call. Many traders and investors implement this strategy to collect additional premium on an existing stock position.
Options are wonderful financial instruments and when used appropriately can cut risk and increase profits on potential or existing stock positions. There is a time and place for all stock and option strategies.
To really drive the point home, consider the Collar option trading strategy. This is a three leg stock and option combo strategy that is very popular with stock investors. It can consist of a long stock position, as well as an out of the money short call to collect premium and a long put for downside protection. Very powerful strategy.
Please feel free to visit our web site optionsimple.com to learn more about basic and advanced option strategies such as collars and covered calls, as well as other important option concepts.
I hope this satisfied your query and I wish you nothing but the very best in your endeavors.
All the best.
~Mr. Simple
PS- Remember, good risk management is worth its weight in gold. Good luck:)
References :
http://www.optionsimple.com