What Is An Option?

By Micheal Jones

When you understand the basics of what an option is and how it works you will then be armed for working with them in the real world. An option is simply the legal right, but not the obligation, for a person to call (buy) or put (sell) the stock?s future or index at a specified strike (price) before a set amount of time has lapsed.

Options are inexpensive when you consider the costs of buying a stock outright. As an example if you purchase stock in XYZ Corp. You might spend $10000 to own it as it is $1000/share and the stock is typically traded in groups of 100; conversely, if you option the stock you may be able to get it for $800 because it may be listed at 8 points.

Options are for a block of 100 shares, so at 8 points, or $8/share, you are paying a fraction of the cost at $800 for 100 shares. Options are sold in blocks of 100.

With an option you do not own the stock; you are simply leasing the potential profits for a set amount of time. The time value of an option decreases the longer you own the option. You should know the difference between the call options and the put options.

Put options will give the buyer the rights to sell a specified number of the underlying instrument; this is usually 100 shares per contract and the price is called the strike price which is set with an expiration date.

Call options will give the buyers the rights to buy a certain number of the underlying instrument; this is typically 100 shares per contract and the specified price, the strike price, is set with an expiration date.

Find out more about options from Andrew Baxter, an expert investor and hedge fund manager. He has some great advice on investing in the Australian Share Market. - 23305

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Developing An Investment Strategy

By Micheal Jones

There are a few things to take into consideration when developing your investment strategy.

Corporate Actions A good way that you can predict whether a specific stock may fluctuate upwards or downwards is by checking into the individual company with which you intend to invest. If there is an impending action on the part of the company such as a take-over or a merger then you may see a dramatic increase in the share price even if the market trends in general are taking a downturn. You can increase your chance of beating the market average by simply knowing a bit of information about a company.

Dividends Another great trick for knowing ahead of time in which direction the share prices will go is to know when the dividend payments will be paid. Some investors actually only invest for the purpose of dividend farming.

This simply means that they will purchase the stocks to take the dividend yields and then sell them when they become ex dividend. You may see a relatively cheap stock, but you should check to see if it is ex or cum dividend. Buying a stock ex dividend means that you are not entitled to the dividend allocation of the stock that you bought. The person who is selling that stock receives the dividend and then sells it at a lower price to you.

Opinions Finally, there is the fact that people are much like sheep; if one says sell then most of the herd will surely follow. If the media says to sell then you shouldn?t just sell blindly, you should investigate further and make your own decision.

Remember that the media is not paid to give you a good bargain or opportunity. The same is true for family and friends, too. Just be confident in your own investment strategy and don?t be afraid to go against the herd if you?ve done your homework and know your own mind.

Michael Jones is an expert investor and hedge fund manager; find out what he has to say about investing in the Australian Share Market and the best approach for investing. - 23305

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How To Invest In The Australian Stock Market

By Michele Perdue

The heart of the stock market system in Australia is the Sydney Stock Exchange. The exchange lets investors both foreign and domestic supply the regional companies with the funds that are needed in order to expand the economy of Australia. You can be among the investors that deal with the yop-performing companies in the Australian market in just a few simple steps.

Your first step is to hire a broker that is registered with the Australian Stock Exchange; this stockbroker will be able to help you fill out the agreement forms, set up your international account for the trades and give you valuable advice on the changes and trends before you begin to invest.

Investment clubs are popular because they let the investors share the learning experience of how the stock exchanges work; you should gather some friends and fellow investors in an investment club to follow the Australian stock market together. When your club meets you should discuss your individual portfolios as well as observe the rising stocks.

In order to counteract the riskier investments it is advisable to purchase some futures in the Australian stock exchange. The people who invest in the futures will sell their shares back at a predetermined time with the price established before any transactions are made. Using this investment too you can have longer range stocks mixed in with the day trading.

One of the rapidly expanding industries in which to invest is the biotechnology industry. Take advantage of the rapid expansion of the biotechnology industry by investing in some of the hundreds of publicly owned and traded biotech firms that are accessible to the foreign investors. These are the ideal stocks if your intent is to invest over a long term in an industry that is gradually growing.

There are other things to consider and more investing options, Andrew Baxter who is an expert investor and hedge fund manager can offer you some great insights about investing in the Australian Share Market. - 23305

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If you wish to learn the best information on investing today you need to check out this free video right now!

Evolutionary Investing

By Michele Perdue

Our hard wiring through evolution has resulted in a short circuit that makes us more apt to risk losing money if we start worrying about not earning it. The majority of investors are busy worrying about their missed opportunities.

Reflection is important but attention should be focused on the purchases that were mistakes rather than the non-purchases that we regret. Mistakes are costly and the missed opportunities do not affect us but to be there as a reminder that we chose the wrong investments.

A useful analogy might be found in a book (more than a decade old) called Unweaving the Rainbow by Richard Dawkins. This science writer, evolutionary biologist and provocateur talks about strategies that are available to the animals with high metabolisms, such as small birds, that has the need to find food often in order to stay alive. Imagine that the bird is flying around seeking its prey and is surrounded by twigs that may hold some cleverly camouflaged caterpillars. If the bird got close and examined the twig a moment it may be able to distinguish between twig and caterpillar quite readily.

But, this is problematic for the bird as it cannot examine each of the numerous twigs lest it starve while looking for its first meal. It needs to take a faster approach, scan rapidly at a more cursory level even if it means missing out on many caterpillars. Finding the right balance between a deep scan and one that is more cursory but still effective is important. Too cursory will mean that the bird never finds anything and starves; to detailed and the bird may find too few and starve.

This is the same thing we must do as investors. If we waste time on a twig, we?ll never find a caterpillar; and we really can't afford to think about all those missed caterpillars. An optimal investment strategy will be profitable while leaving a number of the good opportunities untouched. Birds don?t fret over their missed caterpillars and neither should you.

Investing is a tricky thing to master. Get some great advice and investment tips from a leading expert and hedge fund manager, Andrew Baxter. - 23305

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Forex Exchange Be Trendy

By Chris Green

By now, most forex exchange traders should know what "trends" are. The saying " The Trend Is Your Friend" is true for the most part, if you know how to take that saying and apply it. Looking at the trend of your currency pair that you are trading is usually a good start, giving you an indication on the direction of the market. Although it isn't good to follow the trend in all cases, it is a good start to give you an idea of when to trade, and the expected market direction.

In some cases in forex exchange trading, it can be a little difficult figuring out when a good time to follow the trend is and when to take your own intuition on the trade. There are many different world events that can affect your currency values and put a change of direction into the market. A great way to keep up with this is to read current local and global news every day. Being aware of events going on around the world can have a positive influence on your trading intuition.

When working in forex exchange, it is an important aspect to constantly be absorbing information about the market and effecting market news. Not just a short time frame before your making your trades. Preparing for hours, or even days of information and market conditions is usually the best tactic. If you have gone behind a day or two on up to date market conditions and world wide events, chances are your trading skills are also a day or two behind. Most new traders don't realize this and wonder why they are not a successful trader.

As a forex exchange trader, if you constantly are saturating yourself with information about the market, you will find trades to come easier to you. This is because in your mind you are connecting all the information without realizing it completely. It will almost become a second nature. This is where the every day successful traders have an edge over the average trader. They spend most of their spare time absorbing information about the markets and world events.

Starting out following the forex exchange trend is a good starting point, but in order to take your skills beyond that to achieve the ultimate result you need to allow yourself to become slightly consumed be the forex market. Doing this can make you a master trader, second guessing yourself can be a bad move, know your nature. You are either good at something or not, but the only way to find out is to practice. Don't be a failing statistic or and average trader, take your trading to the next level. - 23305

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