To achieve higher returns in the stock market, besides doing more homework there is one more option available with traders. They can take the services of investment advisory firm in the form of option tips.
With options offering leverage and loss-limiting capabilities, it would seems like day trading options would be a great idea for traders urge for higher returns. In reality, however, the day trading option strategy has a several advantages as well as disadvantages. Let us see –
Advantages of Option trading strategy
- Cost- Options are an inexpensive way to gain access to the underlying investment without having to buy stock.
- Leverage- Options enable investors to stump up less money and obtain additional gain.
- Marketability – Option contracts trade on an exchange and as such are standardized.
- Hedging – Option Trading may be used to limit losses.
- Return enhancement – Option contracts may be used to enhance return on investment.
- Diversification – One can replicate an actual stock portfolio with the options on those very stocks.
Disadvantages of Option trading Strategy
- Cost – As a form of insurance, an option contract may expire worthless. This risk increases the greater the extent to which the option is out of the money and the shorter the time until expiration.
- Leverage – Investors should realize that options leverage can impact performance on the down side as well.
- Marketability – Regulatory intervention can prevent exercise which may not be desirable.
- Hedging – The investor may end up being incorrect as to the direction and timing of a stock price and may implement a less than perfect hedge.
- Return enhancement -The investor may end up being incorrect as to the direction and timing of a stock price, rendering the attempt at enhanced portfolio return worthless.
- Diversification – Diversification cannot eliminate systematic risk.
- Regulation – Restrictions upon exercise may occur by regulatory fiat (OCC, SEC, court, other regulatory agency).
Besides upwards or downwards trends, ProfitAim have best option trading strategies for their option investors where they will definitely earn profit whether there is movement or no movement in the underlying stock price. We ensure that by investing in options, the trader can profit from our stock option tips, no matter which direction the market heads.