Options trading for dummies

betting on the stock market

Alice is getting into the world of investing and she has her eyes on the company XYZ. The current stock price of that company is $20 but Alice is almost certain that in a few months the stock price will rise to $28 or more so she wants to get in on the action. The problem is that Alice is short on cash, she only has $200 to spare and with that money she could only buy 10 shares. Even if the stock rises to $28 and she sells her 10 shares at that price she will only make a net profit of $80 (10 x $28 – 10 x $20). That’s clearly not enough for her, she wants to find another way to make a bigger profit with her certainty that the stock will soon increase in value.

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