Occupy Wall St System Belief Systems

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Options are so called because the trader is never committed into fulfilling the purchase of the stock - they pay the brokerage a premium that is built into the price. Therefore if the price of the stock goes against you, you can simply let the contract expire. If you have opened a 'call' trade expecting the price to rise and the Occupy Wall St company goes bust, you cannot lose any more than the premium you have paid to open the trade. This is the beauty of options trading - unlimited profits but limited risk.One of the other popular attractions of options trading is the leverage that companies offer their clients. Leverage (or margin) allows people to take out positions in a company worth considerably more than the funds required on day one.

In many cases you will only be required to put down 10% of the total value of the stock value. In this instance, if you were to open a contract in Company XYZ where the share price was $5, one contract would be worth $500; you would only need $50 up front to open the trade. This is a simplistic http://theposey.com/occupy-wall-st-review/ example though that does not include the premium that the brokerage will have built into the price.Although options trading leverage is considered to be a major advantage over other forms of investment, due to the massive profits that can be made, it is also a high risk feature. Huge losses as well as gains can be incurred so caution should be adhered to at all times.