Option (from Lat. Optio) - a contract, but not an obligation to buy or sell an asset (commodity or security) at a certain price and within a certain period of time. This financial instrument is called a derivative (or derivative), because its value depends on the value of another financial instrument (stock, bond, commodity, etc.).
Instructions
Step 1
Income from options is unlimited, while risks are minimized. Thus, the use of these financial instruments is effective for both large market participants and private investors. An investor is an option holder, that is, one who has the right to buy or sell an asset in the future.
Step 2
In order to become an investor in the securities market, you must have the appropriate accreditation on the exchange. It is more expedient for private investors (individuals) to contact intermediaries. Therefore, before starting registration with such a company, find out if it has the following licenses: License of the FFMS of a professional participant in the securities market to carry out brokerage and / or dealer activities and / or securities management activities. In addition, to work with options, the managing organization must have an additional Exchange Broker License for performing futures and options transactions in exchange trading, issued by the Commodity Exchanges Commission under the FFMS of Russia. FFMS is the Federal Financial Markets Service.
Step 3
Becoming a member of the exchange, be sure to go through training, for this the dealer (management company), as a rule, organizes training trades. To get started, start-up capital is required; for a private investor, a few hundred dollars is enough.
Step 4
There are two main types of options - to buy an asset (call option) and to sell (put option). In the first case, the investor bets on price increases, that is, he buys a certain number of shares or goods in anticipation of a more profitable resale. In the second case, accordingly, there is a game to reduce the price. Distinguish between American and European options. The American style assumes performance on any day before the expiration date specified in it. The European option must be exercised exactly on the specified date. The exercise of an option is the execution of an asset sale and purchase transaction. Option exercise price - the asset value specified in the contract. The option price is the amount paid by the investor to the option seller.
Step 5
In order to learn how to predict the direction of the price of an asset, you need to have a certain set of knowledge. To determine the direction of the price (trend), each exchange participant compares several characteristics that make up his trading strategy. These characteristics can be obtained through technical and fundamental analysis, the main methods of predicting market movements.
