Articles » Options Strategies
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Trading options is risky. While the risk is limited to the cost of the option (the 'premium'), that isn't necessarily small. A Google June 400 call can cost around $2800.
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Futures – Risks and Advantages
The terms 'options' and 'futures' appear together often enough to confuse even knowledgeable traders into thinking they are the same thing. But, while they have important similarities, options and futures are distinct trading instruments.
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Trading Strategies, Profit and Risk
Risk isn't inherently bad. Without it, there would be far fewer opportunities for profit. In particular, there would be no options market at all. No one would have to speculate on price direction or other factors, since risk always implies uncertainty about the future. But risks come in different flavors and degrees. Let's examine some trading strategies with an eye toward risk...
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Trading Strategies, Basic Concepts
There are several basic trading strategies, but in order to execute any of them successfully an investor new to options will need to know some elementary concepts. The most basic are the call and the put. Buying a call confers the right, but not the obligation, to buy at a pre-set price. Puts grant the buyer the right to sell at a pre-set price. But options are sold as well as bought. That seller grants the buyer the right, and takes on an obligation to fulfill the other side of the trade.
