Diversify your income with Stock Options.

1. What Is A Stock Option?

Stock options are simply contracts that give the owner the right to buy (call) or sell (put) a stock at a specific price at some time in the future. That price is called the strike price. The period of time could be as short as a day or as long as a couple years, depending on the option. The cool thing about buying an option is you have the right, but not the obligation, to buy or sell that stock.

1. Strike Price 2. Expiration date 3. Trading: Calls Option

Options are quoted with a Bid (what someone is willing to pay) and Ask (what someone is willing to sell for) the option. Options may be bought, or sold, using either market orders or limit orders. Since options typically have lower volumes and have wider bid-ask spreads, it's often a good idea to use limit orders when placing a trade to get an execution price in-line with what you are willing to pay.

A single equity option contract represents an option on 100 shares of the underlying stock. Quotes for equity options are multiplied times 100 to yield a total cost for the position.

Strike prices are the stated price per share for which the underlying security may be bought or sold. Equity option strike prices are listed in increments of 1, 2½, 5, or 10 points, depending on their price level.

If a stock option is purchased it is considered to be a debit trade (premium paid). If a stock option is sold, it is considered to be a credit trade (premium collected).

2. An Option's Profit.

One of the most useful things you'll learn in trading options is how to read a "profit curve", which visually shows the profit potential of your trade.

Capital to trade: $300.00

Current Price: $1.68

Expiration date: March 09 2009

1. If the price increases to USD5.00, your profit will be $3,450.00.

Nett profit: $3,450.00 - $300.00 = $3,150.00 @1050%

2. If the price remained below or at $2.70 you only lost $300.00

3. The Advantages of Options Trading

$ - You can make money even the market is in uptrend or downtrend.

$ - Cost Efficiency

$ - Less Risky and Higher Potential Returns

$ - More Strategic Alternatives

4. If you fail to plan, you plan to fail.

There is no easy way to make money as you read over the internet i.e earn USD12,000 per months etc. If you’re novice or inexperience traders, equip yourself with attending seminars to gain knowledge and confident in your trading.

Register yourself with Options University and lets the pros guide you in details.