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Options Advisory Service

October 24th, 2014

“Some education is required before one should attempt option investing,” says Chuck. “For those who are willing to learn how they work, they can become quite proficient at trading options.” Here we offer a high-level summary of what they are, and aren’t, and how small investors can use options as an extremely versatile investment tool for short-term gains.

Options Advisory ServiceSimilar to stocks, options are listed as a security and are executed on one of the SEC-regulated exchanges. In the simplest of terms, they are a contract that involves a buyer who is willing to pay a certain price to obtain certain rights, and a seller who is willing to grant the rights in return for the price.

The key difference between trading options and trading stocks is the time frame on which one holds the security. A stock can be held for an indefinite amount of time, so its value may increase; an option though has a set expiration date. And once the date approaches, an option contract needs to be closed or exercised—or, it will become worthless and not exit any longer, literally.

Other Benefits in Option Investing

When serving as the buyer, you have the ability to follow its price movements and trading volume on a daily basis or even in real-time. When the seller of an option, you too have the ability to quickly learn the price at which your order has been executed. Two other advantages that our Option Advisory Service likes to highlight for those interested in trading options are:

  1. Availability isn’t fixed as is the case with the availability of common stock shares.
  2. Transactions offer less paperwork and shorter turnaround times because options are certificate-less, unlike stocks. Even though, an investor who is trading options isn’t granted a position as a shareholder of a company and allowed to have voting rights and rights to dividends, there’s still great advantages in participating in a company’s or ETF’s potential price movement for a short period of time.

Interested in more? Sign up for our Weekly Option Advisory Service.

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