Risk Management: How Much Money Will You Risk?
My Trader Tip on risk management for TraderPlanet http://www.traderplanet.com/commentaries/view/165617-risk-management-how-much-money-will-you-risk/
Anatomy of the Long Call
When you are bullish on a stock or ETF, one way to express that view is by buying a call option. The long call is an aggressive option strategy, but at the same time the simplist. By owning a call option you have the right, but not the obligation, to buy that specific stock for the strike price of the option in the future. Know that every call option controls 100 shares of the underlying (stock, ETF, futures contract, etc.).
Buying a call option gives you limited risk (cost of the option), with unlimited reward.
Options have expiration dates unlike stocks. Monthly option contract’s last day of trading is on the third Friday of the month and expire on Saturday. Weekly option’s last day of trading is also on Friday, but they expire on the same … Read More »