- Summary: 1. History of the stock mar

In the olden days, the individual buyers and sellers were the investors. These groups constituted of mostly wealthy businessmen. With the passage of time, more institutionalization of markets took place, and larger institutions like banks, insurance companies, pension funds, mutual funds, and so on took the position of buyers and sellers. The improvisation of market took place with the institutionalization. The small investor got the reduction of fees that was to be paid to the broken that were fixed by then government and due to this, western governance was hit.

According to Braudel, every form of trade association was set up, and knowledge of every method of credit and payment was known to 11th century Islamic and Jewish merchants. The joint stock companies were first started by Dutch, according to which shareholders could invest in the businesses and reap both the profits and losses. The first stock exchange was started way back in early seventeenth century, and The Amsterdam Stock Exchange was considered as the one. Moreover, continuous trade was given to it by Dutch.

The sophisticated investors are permitted to enjoy a category of contract known as trading stock options. Its functionality is its strength of the options. According to the conditions of the status prevailing,

positions are allowed to be changed or corrected by these options. The nature of Options is not predictable or conventional according to the requirement of the investor. The position is safely conserved from downtrend to absolute speculation on the brisk movement of the market or index. Risk is always a part and parcel of options. The multiplicity conditions involved in this contract itself an indicator of more risks. Every one cannot directly involve themselves in this type of contract without studying carefully and understanding the conditions.

Risk is always accepted very much in stock options. Generally people with more money are fond of taking risks and investing in stock options. Most of the people who are very much involved in share market are of the strict opinion that one should avoid trading in stock options because of the losses one is bound to get. The people who are very much familiar with equity trading which is considered to be the safest of the trading initially will not involve with stock option trading. Even somebody suggests you to do trading in options, one should not straight way enter into stock option trading. Only one should enter into this trading with the experience and guidance of the experienced people who had participated in stock options trading and not on the mere advice given by somebody. If Stock option trading is done properly one can expect huge amount of money into their pockets.

What is an option

The right granted to a person for buying a stock which is in the options trading category. The accountability is not there on buying or selling the stock at an on target set rate on or before a certain date.

The Stock Trading Options has two types, they are:

Calls and Puts.

Call option is nothing but the rights granted to a person in exercising buy of a particular stock at definite price within certain date. Calls have the coincidence to that of long holding of stock. Investors have the anticipation that the stock might move upwards before the contracts ends. The other option available is put, right exercised to sell a stock a definite price and within a certain date. The buyers of the stock expect the stock to go down before the agreement ends.

Generally the people who involve in Stock Option Trading are of four types depending on the conditions prevailing. They are Call Buyers, Call Sellers, Put Buyers, and Put Sellers. The holders are the investors who buy options and writers are the people who sell options. If the stock is held for a long periods, they are said to be buyers. If the stock is held for short periods, they are called as sellers. The significant difference between call holders put holders, they are not accountable for buying or selling, also they have the option of choosing, whereas call sellers, put sellers are accountable for buying or selling, they are asked to promise for exercising their right to buy or sell.

One should trade with the market trends. To know the trends better, make sure that one is up to date with the stocks is by watching news over the Internet before anyone gets to know it. When there is rise or fall, almost all the sectors in the markets experience similar trend; however, there are exceptions. In case, one doesnt know the updates properly, they will end up buying the shares of a stock at a higher price. Also, one should remember that news becomes good or bad only on the perception of the market. One should always remember that the stock market is a hot sector, and anything can happen anytime, and one should be prepared to accept the changes whatever it is.

Sometimes, one would hear that the company is ready for a good increase which would make people to hold on to it; however, there may be any unexpected news regarding the business in the sector. The bad news overtakes the good one. Lateral thinking is very much necessary for people undertaking the stock option trading as there are many other variables would affect the option price and further choosing the right strategy.