If you’re new to the trading game, you might be wondering about the advantages of trading options over stocks — or vice versa.
When you purchase a stock, you own a small portion of that company — whether you chose to buy that stock because you believe that its value will rise over a period of time or that the company will become more valuable.
However, trading options is extremely different from trading stocks. In fact, it’s best to think of options as what they’re referred to by most traders… derivatives.
Options are contracts that give you the right to buy or sell the stock at a specific strike price by an expiration date, and their prices are directly linked to the price of the stock they’re representing.
But like with everything in the stock market, there’s always going to be a downside, so the key is figuring out which style of trading has the greatest advantage for you…
The Advantages of Trading Options Over Stocks
In 1973, Wall Street got a lot more interesting: Options trading was introduced. The rest, as they say, is history.
Options trading can offer a dependable hedge… along with the potential for massive profits. But, you have to understand what’s going on in this market if you want to see any success.
When it comes to trading options, the advantages of it will always outweigh cons — especially when compared to trading stocks.
When most new traders think about stocks, they’re usually thinking of penny stocks (that you can use with a small account, though extremely volatile) or day trading (where you need a massive account of over $250,000 and trading is still risky).
Now let’s look at how buying options would go: The max amount of money you can lose is the initial amount of money you pay on the premium, and traders don’t need some huge account — you can start with as little as $2,000!
Check out the video up top — and my long hair!
The Day’s Top Flow: May 29, 2024:
Please note, these companies are reporting earnings this week, and each of these trades can and will go against you in a hurry if wrong, especially the two short-dated plays. As always, respect that risk and don’t blow up your account! Paper trading is a great way to learn while still keeping your account intact.
Check out this note Lance posted on Telegram Wednesday morning:
Ciao, Lance here mid flight from London to Florence using the planes WiFi. Abercrombie my top stock of 2024 rocking today. Speaking of retailers I noticed that 675k put order hitting the scanner in FL foot locker ahead of earnings. The shoe stocks have treated us well to the long side like SKX and ONON possibly taking market share from FL hence the bearish put buy. Cheers! 🍷 🍝
- FL May24 31st Strike: 23 Puts premium: $674,347 ABOVE ASK BEARISH
Trade Date: May 29, 2024 Trade Time: 11:09 am - BBY Jun24 14th Strike: 70 Puts premium: $121,045 ABOVE ASK BEARISH
Trade Date: May 29, 2024 Trade Time: 11:46 am - HRL Jun24 Strike: 35 Calls premium: $144,100 ASK BULLISH
Trade Date: May 28, 2024 Trade Time: 11:32 am
Lance Ippolito
Lance Ippolito Trading
P.S. 8 Election Stocks to Buy Leading Up to November
I recently hosted an urgent members call to walk readers through:
- My pre-election market forecast.
- Eight election stocks to consider buying leading up to November.
- An update on my newest “Dollar Ace” scanner, currently in development.
- And so much more!
So if you missed it…
