If I Have 100.00 To Invest In The Stock Market The Basics of Stock Options

You are searching about If I Have 100.00 To Invest In The Stock Market, today we will share with you article about If I Have 100.00 To Invest In The Stock Market was compiled and edited by our team from many sources on the internet. Hope this article on the topic If I Have 100.00 To Invest In The Stock Market is useful to you.

The Basics of Stock Options

When people have extra money they wish to invest, they can do this by purchasing stock options. Hopefully, this article can give you the basics of how stock options work.

First, what are stock options?

It is an agreement between two parties. This contract gives the buyer the right to buy or sell a stock at a particular price. The buyer can exercise this right until an agreed-upon expiration date.

It that gives the buyer the right to buy a stock is called a “call.” The option that offers the buyer the right to sell a stock is called a “put”. And these options can be used at any time up until the expiration date.

Stock options usually come in groups of 100 shares. The group of 100 is known as a “lot”. And the price the lots are bought or sold at is known as the “strike price”.

Here’s an example of a put stock option:

Let’s say you want to buy a stock option of the Ramey company. Let’s say the price of the stock is $210. So you buy one put stock option (which equals 100 shares) at a strike price of $200. And let’s say this option expires in six months.

If the Ramey company’s stock price falls to $190 before the six months is up, you can exercise your right to sell the option, equaling 100 shares of the Ramey company at the original strike price of $200. You can do this anytime before the expiration date is up.

That is, when the Ramey company stock is at $190 a share, you can buy 100 shares of the stock at $190 and sell them for $200 a share. So you make a profit of $10 a share, even though the stock price went down.

Now here’s an example of a call stock option.

Let’s use the Ramey company’s above example, except you are buying a call option for $200. And let’s say this time, the stock price rises to $300. Now what you can do, is exercise your option to buy 100 shares of the Ramey company at $200 and then sell them at $300!

Things to keep in mind:

If you buy a call option, and the stock price never rises above the strike price, the option will be worthless once the expiration date is reached. And of course, this holds for a put option: if the stock price never falls below the strike price, the option will be worthless at the time of the expiration date.

And, of course, there is the cost of the option itself. This is called the “premium” of the option.

There are many places to learn more about stock options. It is suggested that you go online to the various websites that discuss stock trading and options before you get too involved. And please make sure that you don’t spend money you can’t afford to lose. Good luck!

Video about If I Have 100.00 To Invest In The Stock Market

You can see more content about If I Have 100.00 To Invest In The Stock Market on our youtube channel: Click Here

Question about If I Have 100.00 To Invest In The Stock Market

If you have any questions about If I Have 100.00 To Invest In The Stock Market, please let us know, all your questions or suggestions will help us improve in the following articles!

The article If I Have 100.00 To Invest In The Stock Market was compiled by me and my team from many sources. If you find the article If I Have 100.00 To Invest In The Stock Market helpful to you, please support the team Like or Share!

Rate Articles If I Have 100.00 To Invest In The Stock Market

Rate: 4-5 stars
Ratings: 1036
Views: 22581273

Search keywords If I Have 100.00 To Invest In The Stock Market

If I Have 100.00 To Invest In The Stock Market
way If I Have 100.00 To Invest In The Stock Market
tutorial If I Have 100.00 To Invest In The Stock Market
If I Have 100.00 To Invest In The Stock Market free
#Basics #Stock #Options

Source: https://ezinearticles.com/?The-Basics-of-Stock-Options&id=10433542

Related Posts

default-image-feature

New Buys Of Top-Peforming Stock Funds For Past Three Months The 10 Great Strategies On How To Improve Your Personal Finance Immediately

You are searching about New Buys Of Top-Peforming Stock Funds For Past Three Months, today we will share with you article about New Buys Of Top-Peforming Stock…

default-image-feature

List Of High Tech Stocks Selling For 5.00 Or Less Top 10 High Achievers in Business

You are searching about List Of High Tech Stocks Selling For 5.00 Or Less, today we will share with you article about List Of High Tech Stocks…

default-image-feature

Largest So Korean Banks That Trade On U.S Stock Exchange Strategy of Foreign Direct Investment (FDI)

You are searching about Largest So Korean Banks That Trade On U.S Stock Exchange, today we will share with you article about Largest So Korean Banks That…

default-image-feature

Jow To Add A.Following Stocker On My Facebook Android Phone.Page Pervasive Computing

You are searching about Jow To Add A.Following Stocker On My Facebook Android Phone.Page, today we will share with you article about Jow To Add A.Following Stocker…

default-image-feature

Joint-Stock Companies Were Early Steps Toward The Development Of What Interviewing Strategies for Job Seekers: The Two Key Steps

You are searching about Joint-Stock Companies Were Early Steps Toward The Development Of What, today we will share with you article about Joint-Stock Companies Were Early Steps…

default-image-feature

Is The S&P More Volatile Than The Total Stock Marker The Macro-Dynamics of the US and the Canadian Housing Markets: An Analytical Comparison

You are searching about Is The S&P More Volatile Than The Total Stock Marker, today we will share with you article about Is The S&P More Volatile…