I am going to describe the potential risks and rewards associated with the four basic options strategies.
Options are one of the most versatile trading instruments ever invented. They provide a high-leverage approach to trading that can significantly limit the overall risk of a trade, especially when combined with stock or futures. As a result, understanding how to develop profitable strategies using options can be extremely rewarding. The key is to develop an appreciation about how these investment vehicles work, what risks are involved, and the vast reward potential that can be unleashed with well-conceived and time-tested trading strategies.
The four basic strategies that are fundamental to your options trading knowledge are:
- Long Call (buying a call)
- Short Call (writing a call)
- Long Put (buying a put)
- Short Put (writing a put)
Continue reading The four basic options trading strategies and risk profiles
I am currently making my way through the Five Minute MBA in Corporate Finance, which is likely to take about a month at the rate i am going (its 657 pages).
Anyway, Having found a particularly good summary of the different types of financial markets, i thought i would copy it across for those that are interested. I give full credit to the author but i have only been able to find a link to the book here. I also give credit to some definitions i found here.
Types of Markets
People and organizations who want to borrow money are brought together with those with surplus funds what are known as financial markets.
- Each market deals with a somewhat different type of instrument in terms of the instrument’s maturity and the assets backing it.
- Different markets serve different types of customers, or operate in different parts of the world.
Continue reading 9 types of financial markets for capital raising