Making money with Option Trading App can be a great way to invest your money and earn a good return. However, it is important to understand the basics of options before you get started. In this blog post, we will discuss what options are, how to make money with options trading, and the pros and cons of this type of investment.
What is Options Trading?
An option is a contract that conveys to its holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date. Options are categorized as either calls or puts:
A call option gives its holder the right to buy an asset.
A put option gives its holder the right to sell an asset.
The underlying asset can be anything—a stock, bond, commodity, currency, index, or real estate investment trust (REIT)—and options can be bought and sold on most major exchanges around the world. For example, you could buy two calls on XYZ Company stock with strike prices of $50 and $60 and an expiration date of December 21. If XYZ’s stock price is above $60 on that date, both options will be in the money and you will have made a profit. If it is below $60, both options will be out of the money and you will have lost money.
Call Options
As mentioned above, a call option is a contract that conveys to its holder the right to buy an underlying asset at a specified price on or before a certain date. The buyer of a call option believes that the underlying asset’s price will increase by the expiration date so they want to have the right to purchase it at today’s lower price in order to sell it later at a higher price. The seller of a call option believes that the underlying asset’s price will stay relatively unchanged or decrease by the expiration date so they are happy to sell their rights to purchase the asset at today’s higher price knowing they probably won’t have to because the buyer won’t exercise their option since it would not be profitable for them to do so Trade Online.
Put Options
A put option is also a contract that conveys to its holder the right—but not necessarily the obligation—to sell an underlying asset at a specified price on or before the expiration date. The buyer of a put believes that the underlying asset’s price will decrease by the expiration date while the seller of a put believes that it will remain relatively unchanged or increase by the expiration date. Just like call options, puts can be bought and sold on most major exchanges around. the world.
For example, assume you buy a put on XYZ Company stock with a strike price of $50 and an expiration date of December 21. If the stock price is below $50 on that date, the option will be in the money and you will have made a profit. If it is above $50, the option will be out of money and you will have lost money.
