Stocks Vs Options- The Time factor difference

Options are basically a leveraged form of investing. Unlike stocks, in options you are running against time. You buy an option that expires on a set expiration date. If the anticipated underlying stock move does not happen until the expiration date, then you will most likely lose money on options. For instance, if at the expiration date for a call option, if your call option is Out of The Money, then your option will expire worthless (i.e. you lose all your options money). On the other hand, Options can also provide huge returns if the anticipated stock move(rise/fall) happens before the expiration date. This can be based on your thorough research or just on plain old luck.

With stocks there is no running against time. If you put money in a stock and if it doesn't rise by some arbitrary time, you can always give it more time for it to rise. No hurries!




Checkout our New Feature: The Million Dollar Feed