Nowadays option trading is being regarded as one of the most convenient means of making an entry in the stock markets, as far as the financial aspect is concerned. The initial monetary expenses in the option trading are relatively low when compared to straight stock investments.
The returns from the investments made in the options market are relatively high compared to other forms of investment. The option trading market provides the investors with better leverage, as the amount required to invest in them is comparatively low. Over the years the option trading market has helped people to earn quite significant amounts.
With the options the investors are buying the premium, which is needed to trade in specific options. Thus the entire affair translates to having the obligation to sell or a right to buy.
Actually this market allows the owners of the securities to trade in options only in a certain period of time.While buying a call the traders assume that the value of the particular stock would be going up in a period of time; buying a put suggests that the value of the security might fall. Buying a call means that the investor is going long while buying a put means the trader is going short .
The call options enable the investors to purchase real stocks as well as the underlying assets; while possessing the put options means that the owner of the particular security has to sell the underlying properties besides the actual shares.
Provided the holder of a certain option tries to use it, the individual investors would need to purchase the fundamental security at the share price. The options are normally concluded on the third Saturday of each month. After their expiry these options are rendered worthless with the investors losing the authority of trading them at a fixed value.