The Pros And Cons Of Stock Option

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The Pros and Cons of Stock Option
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About Option Segment

• Indian Stock Market is a very big market with
  High liquidity and Traders comes with high
  expectations to earn money in this market. Option
  segment is best for positional traders and
  momentum players. Trading in option segment
  requires less margin compared to delivery of NSE
  cash stocks.

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About Option Segment

• Options are the most dependable form of hedge,
  and this also makes them safer than stocks. When
  an investor purchases stocks, a stop-loss
  order is frequently placed to protect the
  position. The stop order is designed to "stop"
  losses below a predetermined price identified by
  the investor. The problem with these orders lies
  in the nature of the order itself. A stop order
  is executed when the stock trades at or below the
  limit as indicated in the order.

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What is Stock Option?

• Option As the Name Suggests huge kind of options
  to choose while the trader wants to trade in
  Derivative Contracts.
• We strategized differently and provide Call put
  option tips for Stocks with proper SL and Target.

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Stock Option Services of ProfitAim

• ProfitAim is the Best stock option tips provider
  in India for Intraday trading in Nifty Options.
  We provide only sure shot stock option tips so
  that you can trade in stocks with high volume and
  best accuracy.

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Sureshot Stock Option tips by ProfitAim

• Stock option tips are not as like cash calls
  which need to put number of shares to buy, all
  are said in lot basis which differed from each
  company. Stock option calls given by ProfitAim
  Research is sure shot and maintained an accuracy
  above 90. 

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Best and Free Stock Option Tips

• Stock Option service segment is especially
  designed for traders who trade in Stock Options
  positionally. In this pack, we provide two to
  three calls in Stock Options and also best stock
  option trading tips and free stock option tips
  which specially focus on positional calls in
  stock options in industry,We will teach you, How
  to trade without losing your capital in stock
  options?

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Let us see the pros and cons of Stock Option-
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Pros of Stock Option

• Low Entry Cost - Stock options are cheaper to buy
  than the stocks from which they derive their
  value.
• Cost Efficiency - Options have great leveraging
  power. As such, an investor can obtain an option
  position that will mimic a stock position almost
  identically, but at a huge cost savings.

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Pros of Stock Option

• Less Risk, Depending on How You Use Them - There
  are situations in which buying options is riskier
  than owning equities, but there are also times
  when options can be used to reduce risk. It
  really depends on how you use them. Options can
  be less risky for investors because they require
  less financial commitment than equities, and they
  can also be less risky due to their relative
  imperviousness to the potentially catastrophic
  effects of gap openings.

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Pros of Stock Option

• Higher Potential Returns - You don't need a
  calculator to figure out that if you spend much
  less money and make almost the same profit,
  you'll have a higher percentage return. When they
  pay off, that's what options typically offer to
  investors.
• More Strategic Alternatives - The final major
  advantage of options is that they offer more
  investment alternatives. Options are a very
  flexible tool. There are many ways to use options
  to recreate other positions. We call these
  positions synthetics.

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Pros of Stock Option

• Flexibilty - For the most part, stock traders
  have two choices long (bullish) or short
  (bearish). Conversely, options players have a
  wide variety of strategies at their disposal.
  Calls and puts can be combined in myriad
  different ways to profit from any type of price
  action bullish, bearish, sideways, and anywhere
  in between. Seasoned speculators might ignore
  price action altogether, and instead use options
  to profit from dividend payouts or changes in
  implied volatility. Plus, options can be sold to
  generate income on existing stock positions, or
  to set the cost of entry on a planned share
  purchase. Rather than limiting yourself to the
  stark black-and-white palette of stock trading,
  you can use options to fine-tune your approach
  for any market environment.

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Cons of Stock Option

• Lower liquidity - Many individual stock options
  don't have much volume at all. The fact that each
  optionable stock will have options trading at
  different strike prices and expirations means
  that the particular option you are trading will
  be very low volume unless it is one of the most
  popular stocks or stock indexes. This lower
  liquidity won't matter much to a small trader
  that is trading just 10 contracts though.

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Cons of Stock Option

• Higher spreads - Options tend to have higher
  spreads because of the lack of liquidity. This
  means it will cost you more in indirect costs
  when doing an option trade because you will be
  giving up the spread when you trade.
• Higher commissions - Options trades will cost you
  more in commission per dollar invested. These
  commissions may be even higher for spreads where
  you have to pay commissions for both sides of the
  spread.

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Cons of Stock Option

• Complicated - Options are very complicated to
  beginners. Most beginners, and even some advanced
  investors, think they understand them when they
  don't.
• Time Decay - When buying options you lose the
  time value of the options as you hold them. There
  are no exceptions to this rule.

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Cons of Stock Option

• Less information - Options can be a pain when it
  is harder to get quotes or other standard
  analytical information like the implied
  volatility.
• Options not available for all stocks - Although
  options are available on a good number of stocks,
  this still limits the number of possibilities
  available to you.

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