Conventional wisdom tells us to place our money on an investment vehicle we are most familiar with and on investment vehicle we can benefit most. Since understanding the rise and fall of stocks is much easier than knowing the basics of options trading, it is a more popular choice for the many. But the fact is options trading provide several advantages than any other investment vehicles, including the stock market or even the Forex. Let us look at some:
Leverage
Buying a call option gives the investor a good option position that is similar to stock position. For example, if an investor would by 300 stocks selling at $50 per share, he would have to pay $15,000. But if he would choose to purchase three $20 calls (each contract representing 100 lots or shares), he will only have to pay $6,000 (3 contracts X 100 shares/contract X $20 market price). The investor would then have an extra $9,000 to spend or invest on his or her discretion. The process is obviously not as simple as that. The investor would have to know which call to buy to have a good option position, similar to stock position. However, if you are looking for a good investment without risking large sum of...
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