(1) Stock options
(a) A lot like stocks
(b) Options can provide an investor the benefits of leverage
(2) Buying calls and buying puts
(a) Call is the right to buy the stock
(b) Put is the right to sell the stock
(3) Rise or fall in the price of a stock
(a) It is based on what thing might do in the future
(4) Bullish theory
(a) Is when there is a steady up word trend
(5) Bearish theory
(a) Is when there is a steady down word trend
(a) Capability for handling more stocks and greatly increased volumes of trading
(b) Flexibility in determining how to staff their trading floor operations as well as flexibility in using that market’s provided systems
Many companies cannot afford to give retirement plans to employees any longer. With this downfall many people are finding a solution in the stock market. They will invest the bigger portion of their money into safe stocks to ensure they will have money left for their retirement. The other portion of their money they will put into high risk type of stocks which in return which they have a greater risk to make or lose money. Taking a greater risk means there is a greater return or loss possibility, which is in contrast to safe investments because there is a greater chance of making a small return in the long run.
Stock options work much like stocks; options can be used to take a position on the market in an effort to capitalize on an upward or downward market move. Unlike stocks, however, options can provide an investor the benefits of leverage over a position in an individual stock or basket of stocks reflecting the broad market. At the same time, options buyers also can take advantage of predetermined, limited risk. On the other hand, options writers assume significant risk if they do not hedge their positions (Thompson, personal communicator, Feb. 9, 2006).
The most basic stock options are buying calls and buying puts. An option is the right,...