Options Trading

There is a way to make money with the stock market without actually buying or selling shares of stock. Investors can buy and sell option contracts: an option to buy a predetermined amount of shares of a certain stock at the current market price but at a later date. That might be a little bit confusing.

Let's say you think the price of a stock is going to go up but you don't want to invest a lot of money and wait to see. Instead you can purchase an options contract for maybe X shares of a stock for a premium of $Y that lasts for Z months. Then anytime over the next Z months you can execute the contract and buy those X shares at the price when the contract was initiated. If you decide not to execute the contract, you don't have to; you only lose the original premium cost of the contract.

Options are a good, low risk way to play the stock market.