Call And Put Options Investopedia - Different Ways to Invest in Today's World

Nov. 16, 2010 - PRLog -- Call And Put Options Investopedia

Stocks

One can invest in shares of a company. To invest in a public company, one only requires the help of a broker. Only certified brokers are allowed to perform transactions on the floors of the major stock markets. There are many different kinds of companies trading in many different sectors. Generally, investors can use the stock market to find the type of risk to reward situation they seek. However some caution should be placed on the fact that stocks tend to follow the general mood of the stock market as a whole. For instance, the last year has not been exactly profitable for most investors. The whole market was bearish, so even the good stocks went down. However, sometimes the whole stock market (or a whole sector) is bullish during these times investing can be very easy and profitable.

Options

The holder of an option has the right to buy or sell a particular asset at an agreed price at a particular time. Options provide investors with leverage on the underlying asset. One can purchase either call options (for upwards price expectation) or put options (for downward price expectation). For example, one would buy a call option on Microsoft if one thinks it has a good probability of going up soon.

Options usually have expiry dates set three, six, or nine months in the future. Options can be used not only to gain leverage on potential price moves, but also to hedge holdings. Hedging is a business technique used to eliminate risk within future price fluctuations i.e. if you have an option that gives you the right to purchase 5000 tons of rice at US $750 in 9 months from now, then your business would not have to worry whether or not the price of rice will have changed by that time. Hedging your positions can be a good strategy to minimize risk in volatile markets. Of course options in volatile markets are in most cases more expensive than normal. Get Internet #1 - Call And Put Options Investopedia @ http://slackers-trading3.blogspot.com and be Successful forever!

LEAPS (Long-Term Equity Anticipation Securities)

LEAPS are a relatively new investment vehicle. They are in principal the same as options, except for their longer expiration dates. LEAPS have expiration dates one to three years in the future. Since equity price movements can be of a much larger scale during a time-span of one to three years, then so also are the premiums more expensive. Major gains can be achieved with the usage of LEAPS, however the risk associated means they must be used cautiously.

Warrants

Warrants are traded on all the major exchanges. Warrants give you the right to buy a stock at a certain price until the expiry of the warrant. Warrants provide leverage to the investor. Often warrants are included in private placements to give more incentive to investors. Thus, as an investor you should look for those financings that integrate a nice warrants package.

Corporate Bonds

Companies take on debt so that they can expand more rapidly. As an investor you can buy that debt in the form of corporate bonds. The bonds will pay you quite high interest. The security of the bond is tied together with the health of the company. The more stable you think the company is, the better the bonds are. Corporate bonds are not usually as safe as government bonds, but their higher interest compensates this. For those people who wish to take on a small level of risk while earning money in the form of interest, corporate bonds are a good choice. Get Internet #1 - Call And Put Options Investopedia @ http://slackers-trading3.blogspot.com and be Successful forever!

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