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By Aaron CC Sim and Mirriam MacWilliams

Options trading can be quite a daunting subject, especially if you are a beginner to it without any or much knowledge about doing investing, or do not understand the financial markets.

While all types of investments bring with them certain degree of risks, they can also be good opportunities to make money if you are armed with the right strategies and mindset of a successful investor.

One such investment instrument is the buying and selling of options, commonly known as options trading. This article is written to help beginners to better understand what it is all about.

Many beginners new to the financial market will often ask: "What is an option?"

An option is actually a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or index) at a specific price on or before a certain date. It is a security, just like a stock or bond, and it constitutes a binding contract with strictly defined terms and properties.

There are only two kinds of options and they are:

Call Options and Put Options

A Call Option is a contract that gives the owner the right, but not the obligation to buy shares of a stock at a specified price (also known as strike price) on or before the date of expiration.

A Put Option is a contract that gives the owner the right to sell a specified number of shares of a stock at a specified price (strike price) on or before a certain date.

The amount paid for an option is known as the premium. The premium can be further broken down into intrinsic value and time value.

The Strike (Exercise) price is the price at which the underlying security can be bought or sold as specified in the option contract. The strike price also helps to identify whether an option is In-the-Money, At-the-Money, or Out-of-the-Money when compared to the price of the underlying security.

I will explain more about the terms In-the-Money, At-the-Money, or Out-of-the-Money are in my options trading course.

About Wealth Mentors:
Aaron Sim is the CEO of Wealth Mentors. Aaron let go of a 6-figure job as Finance Director of Unisys Singapore to start his coaching and training business. In just 4 years, his business has gone from zero to a successful S$10 million operation. Aaron is Mirriam MacWilliam's first protege in Asia and is now a successful options trader. He is a CPA by training and has been featured in the Sunday Times, Star, The Standard and Shang Hai magazine.

Mirriam MacWilliams is a self-made millionaire. She is a well-respected options trader and takes pride in helping people make money from trading options. She is also the former National Director of Education of the largest non-profit investment club in US and the Chief Options Trainer of Wealth Mentors. Mirriam has developed a step by step options trading course that has been time-tested and proven to help you consistently generate massive profits using options trading, even if you are a complete newbie. You can click this http://www.usoptionstrading.com to learn more about options trading.


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