Stock Trading Options

Options are used extensively in many businesses today. A ball club has an option on a player, a movie studio on an actor or actress, and you can even choose your own option as to how you wish to have your life insurance paid to your heirs

In the case of stock trading Put and Call options, the choice or "option" belongs to the holder of the stock trading options contract; he can exercise his contract or not, according to his choice, and he will exercise the option at or before its expiration only if it is to his advantage to do so. The seller of the stock trading options has no choice; once he has sold the contract, he must accept stock or deliver stock according to the terms of the option and only at the option of the one who holds the contract.

The holder of a Put or Call option exercises his option contract only if it is to his advantage to do so. He has one side of his trade in his stock trading option contract and the other side the buying against a Put or the selling against a Call is done only if it is profitable to the one who holds the option contract.Options can be used as a speculative medium with small, or relatively small, risk and with unlimited possible profit.

Stock trading options can be used as protective contracts, they can protect either before or after a stock commitment. You can buy an option to protect a stock purchase or sale already made or about to be made. You can acquire a Put contract to protect stock which you hold. You can buy a Put to protect against unlimited loss when you buy a stock. You can buy a Put to protect a profit which you already have and don't want to lose. Or you can acquire a Put or a Call to protect you against a commitment which you expect to make at a later date and on which, when you make such commitment, you don't want to take an unlimited risk. So an option is a protective device no matter when it is used.

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