Although options are an extremely
versatile trading tool, they are *not* suitable for investment
purposes.
Apart from being tradable themselves,
options can
also be useful as a 'hedge'.
Buying the Put option:
No matter what the current market conditions,
it always pays to be ready for pullback.
Howto? By buying put options.
A "put" option profits if a stock declines in price. It
could be thought of as having an insurance policy.
Therefore you can make money when a stock goes down.
A put option gives its owner the right to sell
the underlying stock at a specified price. When you buy a put
option you want the stock price to fall. Even if it falls to
zero, your put option gives you the right to sell it at the
specified price.
Although trend trading fundamentals still apply to some
extent, because an option contract is a wasting asset, if you
can afford to invest in a tool,
this $40
visual options analyzer and this more expensive $100
option crawler are relatively inexpensive examples of a
useful one, without which it would be prudent not to trade
heavily in options - the pros sell contracts, they tend not to buy them.
Ask yourself why and be careful.
Watch this
real-time action-research example of simple trading of
leap,
call
option contracts, following predicted within trend
volatility up and down as you might the underlying stock.

To be Contd.
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