Options you can afford

Options treaded on the Australian Stock Market give control over a parcel of one thousand shares.

These options are contracts to buy or sell shares.

Call options are contracts to buy shares

Put options are contracts to sell shares

Either way, buy or sell, each contract stipulates an agreed price and an expiry date.

Owning a share is more expensive than owning an Option over the same share.  For example, a share might cost $20 to own, whereas $2.00 could buy an option to buy or sell that same share.

As mentioned above, to have control of $20,000 worth of shares, you would have an Option cost of only $2,000 (plus broker's fee, a relative small amount).

Options present opportunities because they give you leverage.  And making money on Blue Chips suddenly becomes more affordable and effective.

To own an Option means paying a fee known a Premium .

A person buying an Option is called a Trader.  A Taker pays a Premium to acquire an Option.  He or she then has the right to sell that Option, exercise the Option (proceed with the "Buy" or "Sell"), or let it expire.

A Writer is paid a Premium for selling the Option in the first place, which means he or she is under obligation until the Option's expiry.

For More Information Click Here

1) Australian Securities Exchange - ASX

2) Julecorp Website for Video Explanation