Why do people trade options as opposed to just buying the stock (if they think it will go up)?

[sharonpedrosa]

Apple stock is currently about $500 per share. I can buy 100 shares of Apple, but it will cost me $50,000 to do it. But if I think it’s going to go up in the next month, I can buy 100 options to buy shares of Apple stock at $500 for $25 each.

Say Apple goes up to $600 per share in the next month. My 100 shares of apple would make $10,000. But I need $50,000 of funds to invest in order to do it. And if Apple drops by $100, I’m out $10,000.

If I instead buy 100 options, if Apple goes do

 

[Syldan]

I think, there are several reasons or factors which may lead alot of people to the opposition of a particular thing or a form of investment, which may be attributed to their personal feelings or experiences they have undergo.

 

[HayKay]

Oh. I see the reason why people take more risks using options. I never understood the principles behind it until now but I'm very much enlightened now.
Thanks poster for this educative thread, it's something I'll bookmark and do more research into.

 

[Alexandoy]

I don't think I understand the so called options here and that got me interested because I also have stocks worth $20,000. However, my idea of stock investment is to buy stocks directly so it would mine. With the mentioned options I don't think I would trade with that because I lack the knowledge and it looks complicated to me.

 

[Thinker009]

To me buying like that without options seems to be more easier ,and for me I understand it more better without options ,it's almost the same thing ,inorder not get confused I would buy the stock from the stock exchange broker platform

 

[Nomad]

I do not know what options trading is. However, I know about stock trading. Since I do not know options, I would never trade something that I do not know. However, I would always trade something that I know.

 

[Sotherefore]

You won't really be able to know when it will go up and when it will go down but you can only be able to invest base on prediction just like cryptocurrency.. for me I wont really have time to trade any volatile market except I really know what it is all about... Buying and holding is just the best as I understand.

 

[Kaffyfolla]

Owning stocks is the easiest and most common way to invest money. But buying options can help you reduce your portfolio's downside exposure and earn attractive returns with relatively little up-front capital. Keep reading for a brief overview of options and stocks and how they differ.

 

[kayode10]

Trading options in stock and shares investment is very risky. The reason is that you don't have the control over the price movement of this year you are buying in the marketplace. This is the reason why it is very important to invest on a long time.

 

[Laurentta]

The thing about this buying of stocks is that you might not know when it will go up, it can't be predicted. The best thing is to hold and sell when the prices rises and the demand for it is high.

 

[Syldan]

I think, trading in any cryptocurrency or stocks exchange is more of a choice and how individuals feels or have understanding about it. some may failed to trade because they lack the trading idea about it.

 

[Grandeur]

Well detailed explanation . To answer your question, people buy options that buying the stock outright because they are trading for short term profit. Make profit and withdraw, repeat.

 

[Ononivami]

You have made a very good analysis on apple share and I must commend you for that . It is very good to buy shares of big Companies because they are most likely to surge.

 

[Lens]

The trading option is exactly what I Would go for because the money I would make is far more than just tying my funds down in one company that I am not running.

 

[Sincerem]

I would rather stick to a strategy that works for me. If buying options instead of stock works for you can apply it to any other stock investment plan, if the reverse is the case where buying shares works for you as opposed to buying option you should as well stick to the strategy.

 

[Bookwormlux]

Sometimes, it is usually a result of errors in reasoning process and also due to the fact that we are ignorant of certain things that ought not to be so. That is why people make such mistakes.

 

[Setho]

I believe that a majority of people are just ignorant to it and they think that options is a much much cheaper alternative . On a broader perspective it is actually very difficult in some countries for you to be able to own the original stocks and you are going to pay a lot of fees to brokers.

 

[Sotherefore]

Every form of trading is quite difficult so you shouldn't really expect it to be something really easy for you to just make money like that without having to commit yourself into it.

 

[Syldan]

Actually everyone has different opinions about different kinds of business hw wishes to operate. Some may not be knowledgeable about a particular business and that will makes them lack interest in such business.

 

[Bookwormlux]

It could be that options trading is what they are good at . So they can't leave it and settle for another form of trading at all. It is all about what you have passion for, and the experience you have.