Hello !!

[Mhannum30]

Hello guys, im new to this board but very happy to be here . i apologize in advance for my silly questions but i couldn't find the answers so i i was hoping some of you guys could help me .....
my question is : I am new to stocks and the whole deal but for some reason i started to look into options who ch i know is different from stock trading . I also have a full time job and I'm wondering if options trade would be the best choice since i have limited hours to dedicate to it ..!!!! thanks in advance

 

[Quantt]

Hello guys, im new to this board but very happy to be here . i apologize in advance for my silly questions but i couldn't find the answers so i i was hoping some of you guys could help me .....
my question is : I am new to stocks and the whole deal but for some reason i started to look into options who ch i know is different from stock trading . I also have a full time job and I'm wondering if options trade would be the best choice since i have limited hours to dedicate to it ..!!!! thanks in advance

My advice to the new trader, stay away from options in the beginning and stay away from all derivatives and leveraged products as well...

 

[Mhannum30]

Im sorry. I don’t follow ..


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[tomorton]

Hello guys, im new to this board but very happy to be here . i apologize in advance for my silly questions but i couldn't find the answers so i i was hoping some of you guys could help me .....
my question is : I am new to stocks and the whole deal but for some reason i started to look into options who ch i know is different from stock trading . I also have a full time job and I'm wondering if options trade would be the best choice since i have limited hours to dedicate to it ..!!!! thanks in advance

Hi.

Don't worry about asking silly questions. The only silly question is the one you didn't ask, and should have.

To profit from a rising market you can either buy shares or buy derivatives based on the share price.

The shares entitle you to benefit from the increase in share price when you sell them, plus any dividend payments the firm makes to its shareholders. Shares are usually bought for the long term, they are not leveraged (so £1000 buys you £1000-worth of shares) and when you sell them there can be tax to pay on the profits.

Derivatives include options, spreadbets, contracts for difference, iShares, ETF's etc. They also allow you to benefit from share price rises but you wouldn't qualify for dividend payments. They are bets on the share price rise. On some there is no tax to pay on the profits. Some are not permitted to be marketed in some countries. They usually are leveraged so that £1000 might allow you to "buy" £50,000-worth of a derivative - but there is a cost to this "credit" so they are usually held for short term only.

Derivatives also allow you to profit from rises in the value of financial instruments like indices such as the Dow Jones and the FTSE100, which you can't actually own as they are not shares or other assets issued by a company.

Derivatives also allow you to bet on price falls in exactly the same way. This activity is not available to shareholders.

Because derivatives are offered as leveraged products, its possible to use £1000 to make a "bet" worth a lot more: if the "bet" goes wrong, you could lose more than £1000, though there are methods to manage this risk acceptably.

Of all derivatives, options are one of the more complicated and expensive to use.

Hope this helps.This must have raised a dozen new questions, this site is very good for answers. Have a look at the First Steps section.

Good luck.

 

[Mhannum30]

Tomorton. Very very helpful thank you so much. So option isn’t really the best choice for someone with limited time ?


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[Mhannum30]

Ps : so far i think option is easy to understand. I really like the way it works. But the issue at hand here is time. Im not available all day.


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[tomorton]

Tomorton. Very very helpful thank you so much. So option isn’t really the best choice for someone with limited time ?


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It will work in that you can set up your orders in the evening after work but options brokers charge more in fees per trade and many common options strategies require two positions simultaneously in order to manage the risk of loss. CFD's and SB have cheaper fees and you protect your position with a stop-loss set at the same time as you set the entry order.

Setting orders in the evening is the way I trade. As long as you have a viable strategy its perfectly practical. I never open or close trades "live". Keeping away from the screen during the day ends the temptation to over-trade and chase profits to make every day a winner.

 

[Mhannum30]

It will work in that you can set up your orders in the evening after work but options brokers charge more in fees per trade and many common options strategies require two positions simultaneously in order to manage the risk of loss. CFD's and SB have cheaper fees and you protect your position with a stop-loss set at the same time as you set the entry order.



Setting orders in the evening is the way I trade. As long as you have a viable strategy its perfectly practical. I never open or close trades "live". Keeping away from the screen during the day ends the temptation to over-trade and chase profits to make every day a winner.

What would you suggest to start with other then options ?! Obviously day trade is out of the question.


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[tomorton]

Personally I have been spreadbetting for quite a few years and find it convenient, flexible and the costs are acceptable - to me.

Others say go for a broker who passes your orders direct to the market so that its neutral to them whether you win or lose.

CFD's might be an alternative but I think there are tax implications. Most CFD traders probably don't pay tax on their (very small) profits but regardless, you're burdened with a tax return every year for ever.

Talk to the firms. Go for one that is well regarded by other traders who use / have used them. If you're in the UK, go for on that is UK-based and FCA-regulated.