May 5, 2012

What Is Options Trading and How Significant Is It in Online Investments?

In today’s globalized economy, technology has been considered vital to the proliferation of one’s business and to the growth of one’s finance or profit. One strategy that has been highly utilized over other investment methods online is options trading. But what is options trading? Before going further, it is first important to familiarize ourselves with options trading, what it means, and how important it is to increasing your finance or profit via the internet.

Options Trading, or Online Options Trading, refers to the engagement in the business of buying and selling stock options or other various option positions. It is derived from the words option and trading. In business and commerce, an option refers to the right to buy or sell an underlying asset or commodities at a certain cost at a specific period of time. On the other hand, when we talk about trading, it is considered as engaging yourself in buying and selling for net profit. Thus, the term options trading comes into existence. For some people, it is considered as an investment strategy to financial freedom. One of its advantages that lured investors is that it can leverage their profit by choosing options with the right strike price and expiration. The leverage effect of option trading enables you to take part in the move of high priced stocks with just a small capital expenditure. With this, you have the versatility of options to make money when the market either goes down or sideways. However, some people think that dealing with options trading is risky. Yet, despite of its risks, investors or option buyers always think that, on the brighter side, they can have unlimited profit potential. This is because of their right and not their obligation to exercise a contract for an underlying asset. So, if some people ask you this question, “what is options trading?”, we can therefore say that it is by far the best strategy to increment your profit over the internet.

This article was written for my client on when I was asked to write a sample for the job interview. The topic given to me was "what is options trading". It earned me the job for 6 months.