Options futures & other derivatives pdf

Wise investors understand the difference between stocks, options and futures. Investment in the stock market is not a financial decision that should be taken lightly.

Any chance of successful investing requires a certain degree of understanding about the nuances of the various investment opportunities. Most people feel safe turning over their investment portfolio over to an investment adviser. Therefore, investors need to understand the risks and rewards linked to all investments.

The most conservative approach to stock investment is the outright purchase of stock in companies listed on various exchanges. The stock investment gives the investor material ownership in the company where the total risk is known and limited to the purchase price of the stock, and the upside is technically unlimited.

Online Trading for Stock, Options & Futures | OptionsHouse

A couple of advantages of purchasing a stock in lieu of options and futures are that the ownership lasts until such time as the investors decides to sell their shares. Also, most stockholders have voting rights that are not available for investors in options and futures. The primary negative is the capital outlay required to buy stock.

What is the difference between options and futures?

Stock options and futures are used primarily in two different ways by investors. Some investors choose to purchase options and futures contracts as a method of making short-term investments in a particular stock with a small capital outlay.

Futures and Options

Both stock option and stock futures have an expiration date and strike price, but that is where the similarities end. According to Options Trading , here are the primary differences between these two investment vehicles. True capitalism provides choices.

Within the stock market, these three investment vehicles give investors the opportunity to make decisions and choices that will allow them to match the type of return they are seeking to earn with their overall willingness to accept risk.

Of course, any type of investment comes with some type of inherent risk and investors should always proceed with caution, especially when their financial security could be put at risk.

The key to making good investment choices in the stock market begins with understanding the difference between stocks, options and futures. Money Choice Be smart with your money.

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