Trading options have become the center of the debate over the last few years. Is it dangerous? Can we bankrupt? Indeed, the choice as a form of derivative instruments is far more complex than stocks that they are written by and, like a wild stallion, can hurt you if you do not understand how it works and how to use them properly.
In this article, we will present a selection of five reasons why actual trading better than stock trading to dispel old myths about how trade is a dangerous choice. Let us remember this: dangerous trade options only when you do not understand it. You may find 'Advanced Options Strategies – OptionTiger' directly on web and you'll find some more interesting fact that you should know about options trading.
Leverage that options provide probably the main reason why people are interested in options trading in the first place. Leverage is the ability to do more with the same amount of money. Trading options allow you to make more profit in the same movement in the underlying stock.
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When you buy the stock itself without a margin, you just made a profit of 1% in steps of 1% in your favor. However, in options trading, you can make a profit of 10% on the same 1% transfer of shares made or even up to 100% in 1% steps the same!
You can take more leverage for higher risk or lower maximum for lower risk by choosing a selection of different strike prices and / or the end of the month. In general, more than money option, the higher leverage and deeper selection of money, the lower leverage.
Leverage cuts both ways. This is why the beauty of the leverage in options trading is that it allows you to do the same trade with money that is much lower, thus, you can only use only money you can afford to and intend to lose in every trade fails to every trade option so that the real leverage to help you control your losses instead!
In stock trading, you only profit when the stock goes in the direction you want. To the top when you buy a stock or down when you are short of stock. There is no way to profit in both scenarios simultaneously and there is no way to profit if the stock price does not move.
However, in options trading, multi-directional advantage as possible! There is an options strategy that allows you to profit no matter if the stock goes up or down quickly and there is an options strategy profit even if the stock price remains unchanged! Such is the real magic strategy options that greatly enhance your chances of winning in trading options than stock!