Because options can be a lot more complicated than regular stocks, it’s essential to get some solid stock options training before you make an investment. When you buy stock options, you are purchasing a contract that gives you the right to buy or sell a stock at a predetermined price and time. Unlike regular stocks, options do not give you actual ownership in the company. Because they can be purchased at many different prices and many different ways, options can give you opportunities to profit where regular stocks won’t.
With all of the different techniques and strategies that can be applied when trading stock options, it can be a bit like gambling at a racetrack. Similar to betting horses, you’ll be introduced to a whole new set of terms you’ll have to memorize in order to become a successful trader. In the article “Getting Acquainted With Options Trading”, you can learn all of the basic lingo, stock option types and how option pricing works.