Just communicate with a friend via email on Option trading.... Option trading is the same as Contract for Difference (CFD) purchase... they are derivatives. In both case, you do not own the underlying stock. Therefore, you will not receive the dividents of the stock if it is given out.
Both exercise Margin to leverage on the purchase. With Margin purchase, you can make very high percentage return or loss a lot of money, if you do not know how to handle the derivatives.
Let look at option for a start. For option, there are basically call or put option.
For call option, it gives you the right to buy a stock a strike price. Good for Bull market as you can resell the stock purchase it a lower price for a bigger profit.
As for put option, it gives you the right to sell a stock at a strke price. Good for Bear market as you can purchase a stock at a lower price and sell it (by exercising the option) for high price, therefore profiting from the difference.
There are Many differences strategies that you can deploy in a bull, bear or side market.
Bullish Option Strategy
- Buying a call
- selling a puts
- Bull call spread
- Bull Put spread
Bearish Option Strategy
- Buying a puts
- Selling a calls
- Bear Call Spread
- Bear Put Spread
- Put Hedge
Side/Neutral Option Strategy
- Selling Covered Calls
- Sell Straddle/Strangle
- Calendar Spread
In my opinion, to succeed in option trading, you need education because it is a zero sum game. either you win and someone out there lost OR you lost and someone out there win.
Some of the option education cost is quite expensive.. costing about Singapore dollars of 3,000 or more. For a start, i would suggest that we learn from e-course from the Internet. You may want to try out this Option Trading ecourse. The steps are map out clearly and it is easy to follow.
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