Candlestick Trading Blog

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For those investors interested in getting into stock option trading, there is a lot to learn however the options market is popular because you can make money trading options no matter the market conditions. When the market is down you can make money, when it is up you can make money, and even when the market is sideways you can make money.

When a company grants stock options to its employees it provides three important pieces of information. First it provides the number of shares, then the grant price, and then the vesting date. The number of shares is important because this tells the employees how many shares of the company's stock they will be entitled to purchase under the options grant. The grant price is the price at which the employees are able to purchase the stock. Options are typically given the price that is quoted in the stock market on the day they are granted to employees. The last piece of information that is provided is the vesting date and this is the first date that the options may be exercised. When stock option trading, it is important to know that options must be exercised before their expiration date.

Stock option trading means that investors can do three possible things. They can either exercise the option and buy or sell the underlying security. Investors can choose to trade options, or investors can opt to use options as a hedge against a loss (hedging). If the investor chooses to exercise the option that means that they can take possession of or sell the stock at a fixed price regardless of the current market price of the stock. You must exercise the option on or before the expiration date however when stock option trading. An options trader can also simply trade options with no intent of ever taking possession of the underlying security, or the investor can use options as insurance against losses. This is hedging and hedging allows you to buy a put option at or just below the market price if you felt a stock might drop and you didn't want to sell.

Stock option trading is a great way to make money if you know what you are doing. Investors should however proceed with caution if they are just beginning as stock options are extremely complex and you can lose your money very quickly. Continue your stock options education to find out if stock options trading is right for you.

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