Options Winner

One of the securest way to get high profit from stock trading is options. In principle, options is a legitimate contract which it gives right (without any obligation) to buy or sell asset in certain price and in certain period of time. Contract which gives right to buy asset in certain price and in certain period of time is called call option. Meanwhile contract which gives right to sell asset in certain price and in certain period of time is called put option. How Does it works? I'll illustrate in simple way below :

Call Option Contract

1. Call Option Buyer : Christiano (buying right) amounts to US$ 30
   
2. Call Option Seller : Ronaldo (Selling Obligatory) amounts to US$ 30
   
3. Asset Name : Microsoft Stock
   
4. Contract amount : 1 contract (amounts to 100 sheets)
   
5. Valid Term : 2 months From now on
   
6. Christiano pays premium to Ronaldo amounts to US$ 0,6/ sheets x 100 sheets = US$ 60.
   

What happen if in another day the price of Microsoft's stock is rises or decreased??

If I could analyze, first scenario is that the price of Microsoft's stock is rising. Then Microsoft announce to the public that they will launch the new innovative product which will cause The price of Microsoft's stock is rising up to US$ 50. Thus, as a call option buyer, Christiano will gain profit because he has the right to buy Microsoft's stock from Ronaldo amounts to US$ 30, meanwhile the current price is US$ 50. It means that Christiano could buy amounts to US$ 30, then resell it amounts to US$ 50 so he gain profit amounts to US$ 20. Let's calculate his net profit, US$ 20 deducted with Premium which has been paid to Ronaldo amounts to US$ 0,6/sheet = US$ 19,4/sheet. Because 1 option cantract represents 100 sheets, thus total of net profit = US$ 19,4 X 100 = US$ 1.940.

Second scenario, what will happen if the price of Microsoft's stock is decreased?. For instance, the price of Microsoft's stock decreased drastically and now the price is US$ 10. Then as call option buyer, christiano has no obligation to buy it because it more lucrative if he buys stock in market with US$ 10 instead of buying from ronaldo amounts to US$ 30. The risk is that christiano will lose amounts to premium which has been paid which is US$ 0,6 / sheet X 100 sheets = US$ 60. No matter how much loss he will suffer from the decreasing price, maximum loss he will suffer only as much as total of premium fee.

Illustrations above are enable to be practiced online. Options provider we can use are optionsxpress.com and optionwinner.com. Interestingly, at optionwinner.com we will be given 14 days free trial for introducing how it works.

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