Stocks vs. Options Explained
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- Опубликовано: 30 сен 2024
- Stock traders and investors who aren't familiar with options are leaving opportunities on the table! Learn the key differences between stocks and options.
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/option...
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When trading stocks vs. options, there are differences in terms of:
1) What you own
2) How much time your trade has
3) The different ways to profit
4) How easy it is to lose money
5) How much you can make
6) Taxes
Stocks represent part ownership of a publicly-traded company. Options are financial instruments that derive their value from the stock's price relative to the strike price, time to expiration, and volatility.
Stock positions never expire (unless the company goes private) and can be held forever. Options have expiration dates, creating time limits for all positions.
Stock owners can make money when the stock price increases or a dividend is paid out. Short stock traders make money when the stock price falls.
Options traders can make money in a multitude of ways. Buying calls and shorting puts will both profit when the stock price increases. Market-neutral strategies like selling iron condors make money when the stock price remains in a range. Overall, options traders have more flexibility in how they can make money.
In terms of losing money, stock investors can only lose all of their money if the stock price goes to zero (the business fails). Options traders can lose all their position's value if the stock price is above/below a specific price at the expiration date. It's easier for options traders to lose 100% of their position's value than a stock investor.
While riskier, options give buyers the ability to make outsized returns compared to the stock's return. In the video, I gave the example of AAPL falling 21% while a long-term AAPL put option grew 230% over the same period. The potential of bigger returns than the stock price is what draws many traders to options.
Since most option positions will be held for less than one year, all gains will be taxed at the trader's short-term capital gains rates. Stock investments are commonly held longer than one year, dropping the taxation to long-term capital gains rates.
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Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
Are you a multi-millionaire now given the current price of Bitcoin?
Thanks Chris brilliant video. When I become a successful options trader, I would like to seek you out, and take you to lunch. 😎
How’s that going. Still Trade? Or Gave Up.
Would you please do a video on technical analasys for options? If you use them at all? i am coming from a day trading world.. and that mentality won't work on large caps and options.. Great video, and videos btw :) watched some of them already. including the options for beginners course.
Maaan! I'm confused about this part too! I don't see anybody using the candlestick charts in options trading...is technical analysis unnecessary on options??????
another great video. your Options Trading for Beginners actually got me into trading.
Thank you for watching and supporting my content! I'm glad my videos are helping you learn!
Please make a video about
Delta
Theta
Mega
Vega.
Waiting. Love you. You are Amazing
Great video Chris! The visuals and sounds were a great touch! I think it's great you have a free course going as well!
Thanks Evan! I just love the quiz feature 😂 I think it’s helpful
This guy is an amazing teacher, so easy to listen and learn to.
Thank you for that! I appreciate the feedback
Excelent video. I will be looking forward for your next ones. Thanks.
In another dimension: "Hitman if he chose the legal route...." love your content bro!
Hahah thank you!
Very well explained 😀thanks
Please do you have a discord link
Thank you for this! You are so easy to follow and understand.
First video I watched of yours, and I learned so much. Thank you man, and thank you for the free course as well!
Thank you! I appreciate the feedback. Much more to learn on the channel!
Great info as always. I actually signed up for the course but unfortunately every section says “coming soon”. Is it supposed to say that?
The intention was to add lectures as I publish more YT videos, so it will take lots of time for the course to build out.
Clear and beautiful explanations. Please direct us to good videos on option Greeks and how to use these
Awesome as always
Hey Chris! How are you. I have a friend in USA and I want to recommend you as a financial advisor for him. Is it ok for you?
If you could help please reply.
Hi Jeet! I don't like to give financial advice to people, not even my friends 😂
Hi chris! I downloaded tastyworks and planning to transfer my roth ira account over. I just wonder tastywork will allow to trade spread on Roth IRA (Vertical spread)? Thank you Chris, you are amazing!
Yes you can trade limited-risk strategies like the vertical spread in an IRA!
@@projectfinance thanks you sir!
Does this apply to discontinued rares as well?
Yes!! Phats Santas and h’ween masks for sure
great video 👍🏼
Dude removed his Bitcoin sign recently lol. So many videos on this channel have aged poorly. The video where he showed his ~$150k in Blockfi... I hope he withdrew that months ago, otherwise RIP.
The bitcoin sign is for bitcoin videos. I withdrew all from blockfi long ago. I’m still holding all my bitcoin peacefully!
👍🏼👍🏼👍🏼👍🏼👍🏼👌🏼🍎😎
So basicly if you want more leverage than stock trading currently provides you can get that with options, with it comes more risk ofcourse to lose your money at certain price/times. Am i correct?
Yes, exactly.
How does a person learn about all the different investment opportunites on things such as stocks, bonds, futures, option,...etc? Must one take classes? or is it learned simply from experience?
Experience is the best teacher. Reading is a close second and prepares you for real experience!
If I own 100 shares of stock and I just want to unload them, does it make sense to sell the deepest ITM call option? I feel at least I can get some premium rather than just selling my stock. Am I correct?
No because selling a deep ITM call means you are selling a call with almost no extrinsic value, which is the max benefit you can get when shorting an option.
If you have 100 shares of stock @ $100 and you short the 50 call for $50.10, the call has $0.10 of extrinsic. You collect $5,010 for selling this option.
At expiration, you will be assigned and sell the shares at $50, receiving $5,000 for the shares.
You collected $5,010 for the call.
Your total inflow is $10,010, which is only $10 more than just selling the shares at $100 without using the option. The $10 extra you got to keep was the $0.10 extrinsic in the option at the time of selling it.
Everyone seems to say options have more gain yet your
Buying the right to buy stocks, litteraly the same with more upfront cost
I see what you're saying but if you only buy/sell the options without ever obtaining the stock, then the contract price changes are much higher on a percentage basis compared to the stock.
@@projectfinance man thank you. Your the only one that has said just contracts
Good content. Terrible audio and video quality. Couldn’t get through the video because of the tiny echoing sound. Older videos were much better. I like your content, please try and fix this.
Interesting never had a comment about the audio. I’ll look into it
Not a problem.
Thank you for the great videos. You take a very complex subject and make it easier to understand and learn. Your knowledge is truly at another level.
Thanks so much!
Great video !
Your course is not ready..its all 'coming soon'
Yeah you're right. I am adding videos to it with each upload and it will build out over time but I'm going to stop promoting it until it's more filled in.
SLOW DOWN💀
Chris, In options what is the maximum % profit you got in any single trade in short term vs long term? also define what is short term and long term your point of view? Thanks for your content.
It's always great seeing a new video by you
Good to hear from you.