Options in the financial market

Written by admin on August 6th, 2011

Options are derivative tools used by financial investors so as to gain profits.In this volatile  financial market a market trader needs to be very alert and attentive so as to gain profits.

Option  can either be call option or put option.Call option is where the holder of the call option pays a premium and earns the right but not obligation to buy an underlying asset at a strike price.Put option is where the holder of the put option pays a price i.e. a premium,which gives him the right not obligation to sell an underlying asset at a strike price.When you buy a call or put option that means you are in a long position so when you are in bull market go for long position in call option while in a bear market go for a long position in put option.

Options are actually two different outlook of the same underlying asset because a writer of the option thinks that stock price would go down for the underlying asset while the holder thinks just the opposite that stock prices would go up and he can earn profits this way. So now as to understand whether to be the writer or the holder of the option great guidance is required so as to understand the market trend Gaining an edge in the financial share market an investor needs advisory tips. are those tips which are squared off the same day.Many algorathims and charts are studied so as to predict the market trend which is actually not understandable by everyone.Great technical analyst and financial researchers can provide guidance to such people who want to trade in intraday options.The theoretical value of an option is determined according to many mathematical models. These quantitative models, developed by researchers,  try predicting how the value of an option changes in according to changing conditions. For instance how the price changes of an option  with respect to change in expiration time or how an increase in volatility in market would have an impact on the value. therefore, the risks associated with trading options may be quantified and managed with a greater degree of precision, perhaps, than with some other investments.Options are extremely versatile and dynamic which have great profit potential.For medium term investor, stock option investing is an great additional benefit of investment options to let him make better use of his investment capital.

For more information on and intraday tips


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