Stocks Options Trading

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Options Tutorial

Options History - In Europe the options started to attract tulip dealers in early 1600s who wanted to secure the reasonable price in the future. However, very soon the options started to attract speculators.

Options Overview - Options trading has become one of the most popular trading vehicles on the stock market that gives great leverage without margin requirements.

Why Options - Speculation is the main reason why many traders are involved in options market. This is why the options trading became so popular.

Options Expiration - Expiration date is the day on which an options  contract is no longer valid and, therefore, ceases to exist.

Options Types - There are three main types of options in the financial world: listed options, unlisted options and employee stock options.

Options Styles - In the investment world, the options style is determined in relation to the date the options could be exercised.
 
Calls and Puts - An option is the right but not an obligation to convey a piece of property. The person selling or granting the option is called the options seller and the person who has the right to execute option is called the options buyer.

Call Options - The call options buyer expects the price of the underlying stock to rise in the future but before the options expiration. On the other hand call options seller expects the underlying stock to drop in price.

Put Options - In opposite to call options, the put options buyer has the right to sell the underlying assets (stock) to the seller of the put option for a certain price (the strike price) and before or at a certain time (the expiration date).

Options Chart - The chart below summaries the using of the put and call options by different type of traders.

Option Symbol - Explains how to read an options symbol.

Exercise and Expiration - simple example with explanation of the event when an options buyer makes a decision to exercise the bought options contracts.

Intrinsic and Time Value - explanation with examples of calculating of options intrinsic and time value as a part of the premium paid by an options buyer.

In the Money Options - Out the Money Options - examples of in the money and out of the money options with explanation of the trading risk based on the selected options strike.

Options trading strategy - It is recommended to have developed a trading strategy before starting to invest into options. A trader has to know how much to invest into each options trade in order to protect a portfolio from losses and successfully use selected trading system.

Minimum Invested Amount - This article explains how to calculate minimum invested amount for any trading system by following the simple rule that system returns have to cover expenses at least.

Index Trading

S&P 500 - The main way of investing into the S&P 500 index is to buy stocks of the companies from the basket of this index. Yet, there are numbers of ways to invest directly into the index.

S&P 500 Companies - Here you may see the list of the companies from the S&P 500 basket. The companies that are included in the index are selected by committee on the regular basis and this list could be outdated.

DJI - There are several ways of investing into the Dow Jones Industrial Index besides buying the stocks from the DJIA basket. One of the most popular ways of DOW investing is...

Technical Analysis

Technical Studies - By going deeper into the intraday trading traders start to pay more and more attention to the technical indicators instead of doing the fundamental analysis. In general all technical indicators could be divided into four categories: a) price based indicators; b) volume based; c) breadth indicators; d) combined studies.

Technical and Fundamental Analyses - Both fundamental and technical analysis serve the same purpose to help to define possible future stock trend, yet, at the same time they are completely different in the way they analyze stocks. Both fundamental and technical analyses are important and depending on the trading style one or another could be applied. Before answering on the question which one to use, let us define a few main points about these types of stock analysis.

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