Call Us (954) 306-6516 to open an account TODAY Send us an email

55% return since June 2008

HOW THE OPTION MARKET WORKS

The option markets are highly regulated and liquid markets in the US. An Option gives you the right but not the obligation to buy or sell a stock in the future for a predetermined price. When you purchase an option, you are purchasing a contract that represents 100 shares of a particular stock. The big advantage of Options over Stocks are that they work with leverage, so it is much cheaper to purchase the option that represents 100 shares than purchasing 100 shares of that stock. For example, lets assume that Citigroup is trading at $20 and you think is going to rise to 25; you can spend $2,000 and purchase 100 shares of Citigroup. On the other hand, you can purchase a Call option on Citigroup with a strike of 20 that also bets that the price of the share is going to rise in the future; the call option may cost $200. If Citigroup goes to $25, then your 100 shares investment will give a $500 profit or a 25% return. On the other hand, your option investment will be worth $500 or a $300 profit for a return of 150%. This is a very simple example, but it can give you an idea of the potential of the option market. With smaller amounts of money, you can bet on the price movements of the stocks; plus you have the benefit that if you only purchase options, then you already know your risk.

The other big advantage with options is that you can make investments betting that the stock price is going to go up or down in the future. There are two types of Options - Call options and Put options. Call Options bet that the market price of the stock will go higher and Put Options are for people that think the market price will go lower in the future. Using these two types of options there are several dozens combinations that investors can choose from, all with different risk/return curves and all following different outcomes and expectations. You may come across many advisors or financial pages that will promise you that their strategy is the one with better results. Our experience tells us that a strategy is not good or bad per se; but rather it is the person putting the strategy in place who is going to be a good trader or bad trader.

Contact TeoFutures TODAY (305) 864-2494 or email jmalo@teofutures.com to discuss market options OR open an account