Stock Options Trading
Stock Options Trading is almost the same as a traditional stock trading through Scottrade platform for example, serving as a medium in the market, in which an investor can buy or sell the same stock in the same day, also known as day trading for many people. Day trading has become a full time job for a lot of traders who love to gamble on stocks and have the passion for the finance sector. In order to make money day trading a very large amount of capital has to be used on a stock with high amount of volatility. Stock options are almost done in the same manner, but instead of buying and selling a stock anytime, buyer sets a contract with a seller which gives him the right to purchase the stock option at a set price and future date.
The buyer with the stock option can easily decide if he wants to let the specific contract expire without the purchase of the stock, to where the buyer will lose a small fee, or his premium. Many people who like stock option trading very much enjoy using this feature by letting the contract expire without taking a huge loss, if the market moves against the buyer.
If the buyer wants to buy the stock “call” action, the seller is obligated to sell the contract. On the other hand, If the buyer wants to sell the stock “put” action, the buyer is obligated to buy the contract.
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