The price of the option is considerably less than that of the underlying stock, which is a key reason for the attractiveness of options. Although by a smaller amount, the price of the option will change in the event that the price of the stock changes. Also, the price of an associated option will experience related fluctuations as the price of stock experiences its everyday ups and downs.
Let's take a look at what transpires if things don't go precisely as planned.
Suppose that an interchange is being built, but while digging, they encounter a toxic waste dump that isn't known to anybody. The land is now worthless. The owner then says to you, "I want you to buy this land for $240,000." But you reply, "I don't want to buy it. And although I have the right, I'm not obliged to buy it. I prefer not to exercise my right to buy at this time."
The landowner, as you can see, is at this point stuck with a property that has become worthless. You've certainly lost your $20,000. The landowner has however also seen his property value drop by $200,000.
This is a good instance of how options give the option buyer powerful leverage with limited drawback risk. You can control an asset worth a huge sum of money for only "pennies on the dollar" as an option owner. You can control an asset that has unlimited profit potential by putting down only $20,000. You can earn a huge profit on your money, because you have only a little capital tied up, yet complete control of the asset. Better still, your risk is limited to the money you put up. As the example shows, the option owner has a lesser risk than the person who actually owns the asset.
• What you need to know regarding Options Trading
• How you can benefit from it in the long run
• How to manage Price in bull and bear market
• How to take advantage of options volatility
• How to read the graphics
• How to distinguish types of options and maximize your profit
• How to make Options trading your new business
Le informazioni nella sezione "Riassunto" possono far riferimento a edizioni diverse di questo titolo.
(nessuna copia disponibile)
Cerca: Inserisci un desiderataNon riesci a trovare il libro che stai cercando? Continueremo a cercarlo per te. Se uno dei nostri librai lo aggiunge ad AbeBooks, ti invieremo una notifica!
Inserisci un desiderata