investing in shares

[Enterpriser]

All investments carry risk. The rule is “the higher the risk, the higher the potential return. I play the game also.

 

[Apokalipse]

All investments carry risk. The rule is “the higher the risk, the higher the potential return. I play the game also.

not necessarily. By trading Options, it's not uncommon for you to have an ROI at least 4 times your maximum potential risk. And that's even if the share price moves in your favour by only about 5-10%.

An option is the right to buy or sell an amount of shares, at a fixed price, no matter what the actual share price is at the time.
a call option is the right to buy shares at a fixed price, and a put option is the right to sell shares at a fixed price.
It costs nowhere near as much to buy options, to control the same amount of shares.
As long as you aren't selling naked options, your maximum potential risk is only the price you paid for the trade in the first place (nowhere near as much as the price of the shares themselves)

If you were trading shares, your maximum potential risk is also everything you put into the market (since potentially, share prices can go to zero).
However, the maximum potential risk is much higher.
And your ROI is only as much as the share price moves. If the share price moves 5-10%, your ROI is 5-10%.
But the value of an option can increase in value much more with the same move in the share price.

*edit*
fixed Jam3s-Zer0's signature

 

[Enterpriser]

not necessarily. By trading Options, it's not uncommon for you to have an ROI at least 4 times your maximum potential risk. And that's even if the share price moves in your favour by only about 5-10%.

An option is the right to buy or sell an amount of shares, at a fixed price, no matter what the actual share price is at the time.
a call option is the right to buy shares at a fixed price, and a put option is the right to sell shares at a fixed price.
It costs nowhere near as much to buy options, to control the same amount of shares.
As long as you aren't selling naked options, your maximum potential risk is only the price you paid for the trade in the first place (nowhere near as much as the price of the shares themselves)

If you were trading shares, your maximum potential risk is also everything you put into the market (since potentially, share prices can go to zero).
However, the maximum potential risk is much higher.
And your ROI is only as much as the share price moves. If the share price moves 5-10%, your ROI is 5-10%.
But the value of an option can increase in value much more with the same move in the share price.

*edit*
fixed Jam3s-Zer0's signature

Yes...errm...indeed

 

[robina_80]

yeah the website is
Fantasy Share Trading, Spread Betting and CFD Trading Game hers you can invest in make believe money

 

[robina_80]

also does anyone know a UK based online stock broker who charges really cheap trading prices

 

[GSM CEO]

You wont find a broker that doesn't charge an arm and a leg.

I know mine overcharges like mad

 

[robina_80]

can you help me in finding a fairly cheap stock broker please because i havnt got that much money to play with

 

[GSM CEO]

Yes no problem
Barclays - Barclays Stockbrokers

Information and Brokers - optionsXpress



Look at them and read through the stuff and you should find what you looking for..if not let me know

 

[robina_80]

i want to set up an account with optionxpress
but when it says account type what option button should i click
cash
cash/margin

also what one of the following options should i click to this:

In addition to stocks, bonds and mutual funds, I want to trade:
Options
Futures

 

[Apokalipse]

a cash/margin account requires you to have at least $2000 in it

anyway, just have both options and futures selected

anyway, when trading options, one of the most important things is do not sell naked options

If you are selling any options, always make sure you have options that will cover them, in case you get excercised.