Trading stocks is one thing, but options are a little more complicated. They can be fun, but you need to know what you’re doing. There are different types of options you can buy and sell. Before you even think about investing in stock options, you need to know all about the types and how they apply to the market. Trading stocks is much different than traditional investing, too. What’s the difference?
Investing traditionally means buying part of a company by purchasing shares that the company offers. You buy a company’s shares because you believe the company is going to do well. Based on many metrics, you buy in hopes that the stock price goes up. In many instances, stocks pay dividends, and you are able to collect those dividends as well. Yet trading stocks is a different story.
The investment waters have been muddied over the years. People want gains, and they want them now. They aren’t trying to find the next IBM or invest in the future of IBM. Instead, the market is getting flooded with day traders who have the attention span of a gnat. Day trading can make you money, but it can also give you a headache. Still, it is some people’s cup of tea.
I have day traded stocks before. I have also looked briefly into options. As an investor, it may be in your best interests to look at all of your options so to speak. That way you can truly identify who you are as an investor. Who am I as an investor? I’m a buy and hold investor, a one trick pony type of guy. I like investing in a company over the long term believing it is going to do well.
Are you a dividend investor that buys and holds stocks, or are you a day trader? You don’t have to be a day trader to trade stocks. There are swing traders and people that just don’t necessarily buy and hold everything for the long term. If you are trading stocks, you might want to get into options. There are even people who buy and hold and get into options.
I’m not one to look at stock options anymore. I have my build wealth funnel in place, and that’s the way I want everything. You have to learn who you are as an investor, and perhaps looking into day trading and stock options is the next thing for you to do.
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