Introduction of share market

Chances are you’re reading this book because you’re brand new to options.

You’ve heard about them but can’t really explain to someone else what they are.

You’d like to start trading them but you have lots of questions and nobody seems

to have the answers you’re looking for. This book is for you!

At Options University, we believe there is only one way to teach; you must start

by learning the most fundamental concepts. While it is possible to provide a quick

overview and send you on your way with a false sense of confidence, we know that

will only be detrimental in the long run. That is the “ready, fire, aim” approach often

used by most books and instructors. Instead, we make sure you truly understand

the essence of an option and what makes it different from stock. Once we examine

these core competencies, we will then introduce you to some basic strategies that

you can use immediately. But don’t underestimate these strategies just because

they’re labeled as basic. On the contrary, the basic strategies are what often pack

the most punch and are most widely used – even by professional traders. Advanced

strategies, even though they appear far more complex, are just moderate extensions

of the basics. If you understand the concepts presented in this book, you will

make a smooth transition into advanced strategies should you choose to continue

further with options trading. Most important, you will have enough knowledge to

confidently use the most powerful trading tool ever to hit the financial markets.

Before we get started, let’s clear up the one unfair misconception that you have

probably heard: Avoid options because they are too risky.

As you will find out, options were created to

manage the risks and rewards of

stock investing, which is certainly a good feature. However, if you talk to investors

or traders about options you will find there are a myriad of opinions. To some

investors, the word “options” suggests feelings of risk, gambling, speculation, and

reckless investing. To others, options mean hedging your bet, insurance, and good

money management. How can the same asset cause two opposing views? The reason

is that both can be correct.

It depends on how you’re using the options. Credit cards

are a good analogy. One person can use them to spend excessively and end up in

bankruptcy while another uses them to pay for an emergency car repair after being

stranded on a deserted road. Are credit cards good or bad? Just as with options

, the

answer depends on how they are used and managed. Be wary of people who tell

you to not waste your time with options because they are too risky, because we can

show you strategies that completely

eliminate risk. What’s important is that you are

able to separate which feature of an option is a benefit

for you and which is a risk for

you

. A risk to someone else may be a benefit for you, and the options market will

let you earn money for assuming that risk.

After reading this book, you will know which strategies are right for you and

which are too risky. It all depends on your goals and risk tolerances. We want

to show you how options can be used to enhance and strengthen your current

investment style.

Those who choose to not learn about options may be overlooking the most

important and powerful investment tool available. It is our experience that the

people most skeptical of options are the ones who often see the most benefits. We

believe, by the end of this book, you will find at least one new strategy that appeals

to you, and that means you’ll be a little bit better than you are at this point. And

that’s how good investors eventually become great – by continually getting a little

bit better. At least take the time to understand options; you can always decide to

not use them. But our guess is that this book will only open the doors to a new and

exciting investment world you never thought possible. So let’s begin our journey

and answer a frequently asked question: Why is there an options market?

Why Is There an Options Market?

New traders and investors are often overwhelmed by the different financial

products available. They are kept busy enough trying to understand and choose

between stocks, preferred shares, bonds, mutual funds, closed-end funds, ETFs

(Exchange Traded Funds), UITs (Unit Investment Trusts), REITs (Real Estate

Investment Trusts), and CMOs (Collateralized Mortgage Obligations).

And now you want to add options?