So you want to buy stock options.
Let’s start from the beginning. What are options, and how do you beat them?
Call Options & Put Options
Stock options are contracts that give an investor the right, but not the obligation, to buy or sell an underlying asset (a stock) at an agreed-upon price and date. Option contracts are derivatives based on the value of underlying securities such as stock. They usually represent 100 shares of the underlying security.
There are two types of options contracts – calls and puts.
Call Options give you the right, but not the obligation, to buy at a specific price (strike price) by a predetermined date (expiration date). When buying calls you expect the underlying stock price to rise.
Put Options give you the right, but not the obligation, to sell at a specific price (strike price) by a predetermined date (expiration date). When buying puts you expect the underlying stock price to fall.
Stock Option Risks
Stock options are tricky in that there are so many options (what a pun). You have two factors to consider when choosing a stock option: expiration dates and strike prices. Both have an exorbitant number of choices for every stock.
The danger comes when that choice is made. There’s no in-between with stock options – you either lose heaps or gain heaps. At your call or put’s expiration, it’s either in-the-money or out-of-the-money.
At the expiration date, out-of-the-money means it’s worth $0. Everything you invested in this option is now lost forever. If your option is in-the-money at expiration it’s worth an intrinsic value. Could be anywhere between $1 to $1mil.
There’s so much to lose but also so much to gain.
InFabric Flow: Born to Mitigate Risk
It’s fair to say stock options are complex. Options contracts can sometimes, maybe majority of the time, seem like you’re driving with a blindfold on.
For an example, when the underlying stock goes up that doesn’t always mean the call option will rise. But calls mean profit on price gains in the underlying stock! That’s only the case if you choose the right one. Yeah, everything is always more complicated than it seems. If options were that simple everyone would be a millionaire by now, huh.
That’s why we created InFabric Flow. We’re obsessed with bringing the missing pieces back to the puzzle to help you manage your wealth in the stock market.
We use Artificial Intelligence to analyze absolutely everything on the market. With Flow you see projections of every stock and it’s options so you can choose the stock option that will earn you money instead of lose you money.
We say, welcome to the 21st century. Stop hoping. Start Earning – Today!