| Most people will tell you that day trading stock | | | | a lot more risk, with less chance of making a profit. |
| options is extremely risky and shouldn't be attempted | | | | If the beginning trader would take the time to learn |
| by new traders. And they are right, to an extent. | | | | some of the various trading strategies, they would |
| Trading options can be risky even for professional | | | | greatly decrease their risk and improve the odds of |
| traders with 20 years experience. | | | | having winning trades tremendously. |
| However, trading stock options can be a great way | | | | Learning the complex option trading strategies is not |
| to leverage your investment. For a small fee, with a | | | | that hard. First you learn about the simple puts and |
| defined risk, you can control a large amount of stock. | | | | calls options. When you understand the basic building |
| The primary thing to remember, options are a | | | | blocks, you move on to combining the various strike |
| wasting asset. When expiration Friday arrives, the | | | | prices and expiration dates. Even the most complex |
| option expires. If the option is in the money, you can | | | | stock option trading strategy is made up of simple |
| either use it purchase the stock or redeem the | | | | puts and calls. |
| option for the premium value. If the option expires | | | | These strategies will reduce the risk to a much lower |
| out of the money, you have lost your investment. | | | | level. The down side to these trades is you lower the |
| Most people try to guess which direction the market | | | | return on the trade. But if the trade goes bad, the |
| is going to move, will it go up or will it go down. If | | | | strategy will minimize your loss. If you still have |
| they guess wrong, they lose money. More people | | | | money, you can still keep trading. If you lose all of |
| trade with call options instead of put options, | | | | your capital, you are out of the game. |
| because they understand going long on the market | | | | So the people that say day trading stock options is |
| but do not understand going short. | | | | risky are correct. But if you take these simple steps, |
| The vast majority of traders do not utilize trading | | | | then you can lower the risk, and still maintain the |
| strategies such as straddles or strangles, much less | | | | leverage that trading options will provide. |
| condors or butterflies. As a result, they are taking on | | | | |