Options trading is a sector of the stock market that is fairly easy for most newbies to investing. If you've never heard of options trading or you just want to learn more about how to make money with this method, we're going to go over all of this below.
What Is Options Trading?
Options trading is purchasing the ability to buy or sell a specified number of stock for a set price in the future. With options trading, you're not actually purchasing ownership or stock in a company. Rather, you're purchasing the opportunity to buy or sell ownership or stock of a company in the future. Let's look at some common terms involved in an options agreement so you can better understand what it's all about.
Expiration Date
Options contracts come with a few key terms that you'll need to understand. First, each options contract has an expiration date. You can exercise your options contract up through the expiration date. After the option has expired, you no longer have the ability to exercise the agreement.
Stock
Each option contract is for a particular stock. When looking at options online, you'll see the ticker symbol of the company that the options contract is regarding. When you purchase your options contract, you don't get ownership of the stock. Rather, only when you exercise your option do you get to actually buy ownership via the stock.
Strike Price
The strike price is a very important number to understand as it determines how and when you exercise your options agreement. The strike price is the price at which you can buy or sell stocks that were included in your options agreement. For example, if the strike price is four dollars for a call option, then you could exercise your contract by purchasing the identified stock at the strike price.
Call or Put
Every options contract will be either a call or a put. In the stock market, a call is when you buy a stock. A put is when you sell a stock. Therefore, you can purchase an options contract that gives you the ability to buy or sell a stock at the agreed-upon strike price before the expiration date.
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How Can You Make Money With Options Trading?
If you're thinking about making money trading options, there are various ways you can do so. By understanding the basics of call and put options, you can start to formulate your own method for making money. Let's go over a few examples of basic options to get you started.
A Call Option
A call option is ideal to purchase when you know that a company's stock price is likely to rise in the near future. For example purposes, let's say that you buy a call option for 100 shares of stock ABC that has a strike price of $50 and an expiration 30 days from now. Fast forward 20 days and you notice that the stock price of ABC has increased to $60 per share.
You'll want to exercise your call option. This means that you can purchase 100 shares of ABC for $50 per share. Then, you can turn right around and sell those stocks at the current market rate of $60 per share. That's a $10 per share profit from your call option.
A Put Option
The other common type of options contract is a put option. This option agreement gives you the ability to sell stocks in the future at a set price. You'll want to use this type of option when you know that a company's stock is likely to decrease in the near future.
For this example, let's say you're looking at an options contract for company XYZ. The options contract is for 30 days, 100 shares of stock, and sports a strike price of $30 per share. The day before your options agreement expires, the stock price of XYZ drops down to an all-time low of $10 per share. You can exercise your options contract.
You'll start by purchasing 100 shares of stock XYZ on the market for $10 a share. Then, you'll go ahead and sell those shares according to your options contract sale price of $30 per share. You'll be able to profit $20 per share with this method.
As you can see, there are various ways to make money with options trading. Understanding the basics above can give you a great foundation to which you can build upon to create your own unique methods for options trading.
This follows reports from Personnel Today, which identified a consistent rise in commuting times, with travel times now five minutes longer than they were in 2007. With UK workers losing more and more time to the daily commute – what does this equate to in terms of potential earnings?
Workers of UK could earn an average of £6.29 each day on their commute, which over a year equates to a significant £1,634.40. Based on a full working lifetime of 49 years (16-65), the potential earnings throughout a whole career is a whopping £80,134.60.
The people of London have the potential to earn the most, at £169,639.47 over a lifetime – £13.32 a day, £3,462.03 a year – and those from Northern Ireland have the potential to earn the least over a lifetime, at £58,013.35 – £4.56 a day, £1,183.94 a year.
“It’s not until you crunch the numbers that you can see the staggering financial cost of commuting in UK, and across the whole of the UK,” says Dan Greenslade, Marketing Specialist at Meetupcall. “There is such high earning potential during commutes, we can’t help but wonder whether this research will make individuals rethink how they spend their commute – and perhaps make more productive use of the time.”
“Employers have options too. There are so many developments in technology now that facilitate remote working, allowing staff to cut out the commute entirely, or work flexibly while they’re on the move.”
(Source: Meetupcall)
The average British earner would have to work for a staggering 35,715 years to make a billion and join the world’s top tycoons, as revealed in a newly launched innovative tool.
Budget Insurance reveals a wealth of stats and facts about the world’s richest people, demonstrating how average UK workers stack up against top tycoons like Mark Zuckerberg and Bill Gates in ‘The World’s Richest: How Do They Compare?’.
Daydreaming about striking it rich or how many pay cheques it would take to save a life-changing financial sum is common. Discover how average British earners really compare to the world’s richest and take a deep dive into their traits, exploring comparisons over the last decade and even seeing how many years of hard graft are required to join that prestigious world rich list.
In its latest discovery piece, Budget Insurance reveals that a worker in the UK on the average wage of £28,000 would need to work roughly 35,715 years to make their first billion.
The results also reveal that the net worth of those gracing the rich list has increased by $26.88 billion (78%) over the last decade. The average net worth of the world’s current top 10 richest is $61.28 billion[1] whilst, in contrast, the average British person currently has a net worth of £147,134.[2]
The average worker’s net worth may not be as jaw-dropping as that of the world’s most affluent, but it is imperative for everyone to safeguard assets like health and the home by ensuring that the right insurance cover is in place. Yet despite the huge differences in assets between the world’s richest and the average worker, there are some surprising similarities. Government statistics indicate that 32% of Brits have two or more cars, much like the billionaires in the top 10, who typically own between two and three cars each.[3] However, a rough estimation of annual insurance of £575 for a 2017 Ford Focus pales into insignificance against the cost of insuring Bill Gates’ Porsche 911 Carrera at £2,794.52.[4]
Anna McEntee; Associate Director Consumer Marketing; Frontline at Budget Insurance, said: “It’s fascinating to hear how the other half lives. We imagine they probably all have an army of assistants to keep them on top of their household admin – but whether that’s the case or not, we’re sure it’s just as important to them as it is to us to ensure they have the right insurance to protect the things they hold dear.”
From net worth to hair colour, height to children, the piece compares the traits of today’s richest and pits them against data over the last decade.
What’s more, the insurance provider has delved into how much money the world’s richest have donated to charity, their Twitter followers and the number of times they’ve been married, amongst other personal traits like car and home ownership.
The 10 Richest People in the World 2017[5]
- Bill Gates
- Warren Buffett
- Jeff Bezos
- Amancio Ortega
- Mark Zuckerberg
- Carlos Slim
- Larry Ellison
- Charles Koch
- David Koch
- Michael Bloomberg
(Source: Budget Insurance)
[1] https://www.forbes.com/billionaires/list
[2] http://www.dailymail.co.uk/news/article-2574038/Average-British-person-net-worth-147-134-0-01-cent-David-Beckham.html
[3] https://www.gov.uk/government/statistics/road-use-statistics-2016
[4] https://www.comparethemarket.com/
[5] https://www.forbes.com/billionaires/list/
