Why is trading options better than trading stocks?

A lot of people choose to trade in options than trade in stocks because trading stocks poses more risks than trading options does. But this is not the only reason and benefit of trading in options.

Trading options offer leverage to traders that allow them to do more while using the same amount of money. This opens up more opportunities for traders, letting them make more profits compared to stocks when the underlying stock moves.

Options trading requires low capital investment. Since one doesn’t trade with the underlying stock, one doesn’t really have to invest capital equivalent to the cost of the stock. Options trading is therefore more accessible to investors and traders who have limited budget to get started with.

Options trading allows traders to enjoy better control over their losses. Because of the leveraging that one gets with options trading one can do the same kind of trade using less money, using money that one intends to. And since one is only working with the money that one can lose, one is able to enjoy better control over one’s loses and avoid complications that are part of trading in stocks.

When trading stocks, you can make profits only when the stocks go upward when you are buying and downward when you are selling. You can’t make money both ways and is not possible to make money out of stocks that don’t move. Trading options lets you make money regardless of the fact what way the stocks go.

Learn options trading strategies to enjoy the numerous benefits offered by it.

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Comment by Robert Koveleskie on May 1, 2015 at 2:04am

Considerably experienced with options, and as a past successful stockbroker, I believe the typical inexperienced day trader should trade options rather than stocks so you can loose your money quicker and stop the pain.

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