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Options
Basics
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With options you are given the right,
not the obligation, to buy or sell a security, at a specific price,
for a predetermined period of time.
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Your maximum potential loss is limited
to the amount you paid (i.e., the premium) when you buy an option.
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Each option contract corresponds to 100
shares of an underlying security.
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No margin is involved; when buying
options is a cash transaction.
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Your maximum potential profit is the
amount of the premium you may receive, when you sell (write) an
option.
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As options approach expiration they lose
time value. During the last 30 days of it’s life, an option loses
its time value the fastest.
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Options are less liquid than the
underlying security.
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Information Corner:
Safe Investing -
There is no trading system in the world that can guarantee a 100%
success rate. Sooner or later, you will likely experience a negative
trade, i.e., a trade where you lose all the money you invested...
Options Symbol - In order to trade a
particular option, you might need to look up its symbol. (If you trade with us,
we will of course provide you with the exact symbols you require to place a
trade)...
Open Interest - For a given
option, the open interest is the number of open contracts - either puts or calls
- that have not been exercised, closed or expired on a particular day.
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