Saturday, March 28, 2020

WHICH IS THE BETTER TRADING METHOD, CASH OR OPTIONS?

CASH TRADING :In this buying or selling of securities is done by providing the capital needed to fund the transaction without relying on the use of margin. Cash trading is achieved using a cash account, which is a type of brokerage account that requires the investor to pay for securities within two days from when the purchase is made.
Advantages
1.       Less involvement from the trader/investor
2.      Suitable for big accounts
3.      The safety factor is little high as compared to F&O
4.      carry forward or holing power if you are in lose
5.      if equity then no premium melting.
6.      no tension of broker squarefing off postion
Disadvantage
1.       ROI is less as compared to F&O category
2.      Difficult to make it as a profession
3.      It’s not possible to carry a short position overnight
4.      More money required

OPTIONS TRADING : confers the right but not the obligation to buy (call option) or sell (put option) a specified underlying instrument or asset at a specified price - the Strike or Exercise price, until or at specified future date - the expiry date. The price is called Premium and is paid by buyer of the option to the seller or writer of the option.
So, based on the definition I believe the answer is clear to you. Moreover if I talk about
·         ROI is better on Options than Cash Market trading although the risk is also higher if you are not trading with intraday limit.
·         You can hold an option till expiry although options have a time decay issue as the value of option depends on time.
·         Options are safe gamble, the value cannot go in negative, your risk is defined already. You will not loose below it.
SO FOR ME OPTIONS ARE BETTER TRADE THAN CASH MARKET.

2 comments:

  1. Amazing information you providing about all market recommendations. I am also looking this way of information, I like your post and your way of writing is so excellent. Thanks

    ReplyDelete
  2. Thankyou sir... for live market trading tips whatsapp me on 7772909587

    ReplyDelete