Trading options has many benefits when compared to other investment vehicles. Option gives a trader liberty to invest in favor of a specific direction in which market will move. For example a trader can forecast that a financial security will be trading above or below a particular price 5 months from now and invest in options accordingly.

In United States an option contract includes 100 underlying asset’s units, so with very little amount of investments a trader can control good number of underlying asset position. Because of this reason trader loves the leverage that options provide and that remains to be one of the top reasons why traders would choose to invest in options over any other type of investments.

There is a learning curve involved and because of this reason a trader requires to be careful before investing in options. So by investing in options if one can make a fortune then there is also a possibility that one can lose huge amounts of money by investing in options. Therefore ignorance is not bliss in case you are considering investing in options.


Option Strategies

If you are aware about the fundamentals of options you can begin learning some strategies that can be employed while trading options. Firstly, there are call options for the traders who are bullish about overall market or a particular asset; on the contrary, if a trader is bearish about the markets or a particular asset he/she can invest in put option. Straddle and Option Spread are the two strategies if used correctly can help the trader to put a limit on the losses that he/she can make and at the same time trade can give unlimited returns.

Option Pricing

Option pricing is based on the performance of the underlying asset it is representing. Usually the price or premium to be paid for an option contract is not more than 10% of the investment of the actual asset price. So even if a trader wants to invest in a particular stock he can select a strike price and can invest in options which would be 10% of the total investments and he can use the remaining money to invest in something else until the contract end date.

At times it is difficult to decipher whether a hiccup in the economy that occurs is positive or negative. In many instances it can be both, similar to a battery being positive on one end and negative on the opposite end. As you know for the last ten years or so, the “in-thing to do” has been for corporate America to downsize employees as a means of cutting lavish spending rather than stakeholders monitoring the expensive taste that many CEOs have developed.

This downsizing/merging usually means that if a department is eliminated from the budget then it will become another department’s responsibility to absorb that work and keep the business flowing as usual. We think you will agree that this is a positive money glitch for the corporation (less money being spent on salaries) and a negative for the employees (that now find themselves without jobs).

Ten years ago, when this seesaw effect repeatedly began employees were a little disgruntle maybe, however with adjustments they were able to take on the workload of the job positions that were eliminated. A good analogy of this would be that if one places a few grains of salt in water one will not notice a drastic difference in taste. However, imagine placing a few grains of salt in the water consistently every month for ten years. Eventually, one will have salt water instead of the good drinking water from the beginning. The same thing happens when things are too positive or too negative. Note, that this thought will be examined further.

But, for now many Americans are saying they are happy to have a job during this recession. We agree that by all rights you should have gratitude for being employed when so many others are not. However, if you’re grateful, yet feeling that you are overworked and under paid; chances are that you are absolutely correct. The Labor Department has issued its productivity figures for the second quarter a week ago. Those figures show that our present workforce produced 6.4 percent more goods and services in the second quarter this year than this time last year.