Monday, March 17, 2008
SkyQuestCom's Success Blog: Kim Reilly's Option Trading for Beginners
If you’re looking to get started in an area of trading, options are one choice available to you. But what are “options”, and what are the benefits, or the cons of trading options? Here’s a beginner’s guide to help you get started quickly with the basics.
What is an option?
An option is a contract between a buyer and seller that gives the buyer the rights, but not the obligation, to buy or sell an asset at a specific price within a specific time period. Like stocks or bonds, an option is essentially an insurance, but it’s also a binding agreement between parties.
Options applied in everyday life
The concept of an option can be seen in daily situations. For example, you discover a used car you’d want to buy. Unfortunately, you don’t have the money to buy it until 2 months later. You talk to the owner and negotiate a deal that gives you an option to buy the car in 2 months for a price of $10,000. The owner agrees, but for this option, you pay a price of $1,000, as a binding agreement.
What are the different types of options?
Options are available in 2 varieties, “calls” and “puts”, and you can buy or sell either type. During trading, you make these choices:
- Buy or sell
- Choose a “call” or a “put”
Why trade options?
There are several reasons why people choose to invest in options:
- By trading options, investors can use leverage to increase returns
- Investors will be protected from a fall in the value of a share with options
- A small amount of cash can give investors control of a much larger value of options
4 things you need to trade options successfully
- A mentor, or a successful, trustworthy broker who could teach you how to trade options successfully
- Money (as a form of risk management)
- Method (strategy)
- Mindset (the way you think about money)
For more information on how to trade options, watch Kim Reilly’s online video seminar, “Options Trading” at http://learning.skyquestcom.com/. Kim Reilly is “Australia’s #1 Options Trading Coach” who has helped thousands of Australians invest in their future and achieve their quest for financial freedom.
With over 200,000 subscribers around the world, SkyQuestCom is Asia's largest multimedia e-learning company. SkyQuestCom offers online video seminars of the world's best personal development experts and business gurus including Anthony Robbins (Unleash The Power Within), Robert Kiyosaki (Rich Dad, Poor Dad), Brian Tracy (The Psychology of Selling), T. Harv Eker (Secrets of the Millionaire Mind), John Gray (Men Are From Mars, Women Are From Venus), Jay Abraham (Getting Everything You Can Out of All You've Got), Bill Gates (Microsoft), Warren Buffett (Forbes' "Second Richest Person in the World") and many more.
Labels: investments, kim reilly, kim reilly option trading, option trading, options trading, options trading for beginners, Personal Development, stock option, Success, Success Blog, success secrets
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