[WorldTrader]

Jonathan,
I guess in a way it can decrease the risk. It is certainly a fixed risk. So, you can only lose what you pay for the option. If you trade a Futures contract or a spot currency or a stock. You can have a limited risk with the use of a stop, but then you can have slipage or if you are holding while the market is closed..you don't know where it will open back up with a large gap and you can have a greater loss.

I think the beauty of options is that you can trade large priced stocks with much less money or contol more shares with less money. This way you can have a higher percentage return due to investing a small amount of funds.

So instead of buying 1000 shares of AAPL for 266K, you can buy 10 options for 18K and if the price goes up $10 you will make 10K on the 266K or 10K on the 18K.

The problem is if AAPL goes down you will lose some or all of the 18K. You will lose some of your value on the 266K shares, but you still have the shares and you can hold them till they comeback or sell at a loss.

Anyway, I am sure there is an option thread or you can start one. There are smarter options folks out there. I just gave you the simple overview.

[Tiobingo]

It's true what WorldTrader says. You can take advantage of leverage with less risk. But the idea of risking less can still be a dangerous concept. If you risk less but still lose 100% of your risk, that's certainly not good either. It is very important to know how to select the right options and/or options strategy and to have your stop loss in place so you can get out of that option with an acceptable loss. It's still a trade and you should always plan your trade and trade your plan.

[CathyM]

Greetings Traders!

I'm here, I'm new, and I'm learning (mostly through helping Traders and their Mentors who use hotComm to conduct "trade school".

Wanted to let you know of two useful sites. One is OnlineTraderCentral.com where you can attend free trading webinars. The other is a United Kingdom based site for traders, and even great networking for traders, sort of akin to a LinkedIn.com as there is info there for traders also still working or looking for a new career.

I hope you enjoy those links and would like to be invited to stay a while.

Always, I'm a big fan of NetPicks.com that is a company that was a pleasure to do business with. Highly recommended!

~Cathy
~ TradeWell Forum Readers ~

[CathyM]

Might help you if I gave you all the URL of the networking website: PlacingTraders.com. Doesn't do you much good when I mention it, then don't give the site itself. Hope all had a good day!

Went to the beach so just got back and sitting now down to computer to see what I've missed. Curious, since it was a busy holiday, wonder how that affected the markets.

[JonathanJohnson]

Wow! Thanks guys. That really helps out. I have been playing around with the think or swim software lately and I am going to start trading options with a paper portfolio. I'll see how that goes. Everyday I learn more and more info through this site! It seems like a great community.