Options vs. Stocks: Which Is Right for You?

When it comes to earning a profit, two options that individuals can consider is options and stock trading. Both can give potential traders an opportunity to make unlimited income when done right. When planning to enter trading, perhaps you will wonder which between options and stocks is right for you. Robert Peter Janitzek gives a short guide to help you decide.

When investing on the market, you have a choice between stocks and options. The former represents shares of ownerships in individual companies. The latter, on the other hand, allows betting on the direction you think a stock price is headed. Although there is a huge difference between the two, they can complement each other in their portfolio.

Stock Trading

If you are looking for a straightforward way of investing for a goal such as retirement, stocks is the right choice. Investing on stocks is quite simple. As the market is quite volatile, stock market trading can be a good choice for long-term investment. If you are just getting started with trading, investing on stocks is a good starting point. Aside from the lower expenses, the approach is straightforward as well.

Once you have decided which stocks to invest in, you need to monitor on them every day. You can set a price ceiling for you to earn the profit. As mentioned, the stock market is volatile, the price could decrease to zero and you could end up losing your entire investment. How active you are could affect your performance.

Options Trading

On the other hand, options offer a more tactical approach to investing. Robert Janitzek reveals that If you are looking for flexibility and smaller investment requirement, options may the right choice for you. Here the investment period is much shorter which makes them perfect for regular buying and selling. However, all options contracts have expiration dates ranging from days to years. The method for options is simple: buying or selling depends on three factors: the direction the stock is headed, the amount of movement from its current price, and the time frame in which it will happen.

With options, you have to learn trading jargon such as puts, calls, and strike price. Trading options is often used to hedge potential risks. While stocks allow a hands-off approach, options involves a hands-on approach. The strategies in options are also riskier than stocks.

So Which Is Right For You?

Deciding whether stocks or options is the right choice for you is a matter of personal decision. It will all depend on your investing style.

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