Trading Stocks

The balance between supply and demand sets stock prices. When demand is high and supply is low, prices rise.
When supply is high and demand is low, prices fall. Stock prices are driven by the relationship between buyers and sellers.

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Attractive stocks have more buyers than sellers, which drives up prices, while less attractive stocks feel the reverse effect. Investors are buying future growth when they invest in stocks.
Yet, the stock's price may float up or down based on some broad market or economic factors that may only indirectly affect the company. The Fed is the single most important federal agency for stock market investors because its actions directly affect the markets.

Options Spread

In option trading, there are many option strategies you can use. There are two basic options: call option and put option. Call contract will give the holder the right to buy an asset at a specific price or strike price. Put contract is the opposite. It gives the right to sell an asset at strike price.

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You can combine those two basic options and create lots of strategies. Each option has its own strike price and expiration date. You can buy and sell option with different strike price and expiration date to create many strategies. Those strategies can be categorized into options spread. There are 3 types of options spread. They are vertical spread, horizontal spread, and diagonal spread. Spreads are created by selling and buying options on the same asset.

Options Trading

While unfolding the topic of options trading, we first need to have a clear understanding of what the term 'options' signify. Options to an investor is an investment option very much like mutual funds, stocks and bonds but at the very same time options differ from the other types of securities listed above in being a bit more complex than these. Options can be defined as a contract that gives the owner the right to buy or sell an asset at a specific price on or before a specific date. It is called options because the buyer has the right but not the obligation to trade his stocks and thus enjoys the advantage of limited risks but unlimited profit potential.

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