Tag Archives: Option Trading

Trading A Stock Versus Stock Options

Trading A Stock Versus Stock Options

There is a lot of difference between the purchasing of stocks and purchasing of stock options. The purchase of stock option means that you are speculating and hence betting of the direction of the market. Trading in options is very different from the simple trading of shares. It requires experience in order to move forward with the transactions and succeed. Those who are new into the field of trading should take some time to gain experience before the start trading of options.

The terminologies and the strategies of options trading are different from those of share trading. Anyone who wishes to trade in stock options should first aim to understand the terminologies involved and the strategies required. Options trading have two options, namely: puts and calls. When one buys a call option, then one has the right to buy the shares at the exercise price. But this purchase has to be done before the option purchased expires. Buying a call option only means that one has the right to purchase a share but is not obliged to do so.