Tag: gold stocks

Online Investing in Stocks and How To Start With Brokers

Any investor who wishes to make use of an online stock broker – whether to take advantage of the decrease in fees, or to manage their own research – needs to be prepared for a significant difference from the world of traditional or discount brokers. First and foremost, stock investors must be prepared to manage their investments according to their own research, and they must be comfortable without a friendly voice at the other end of a telephone line. For all of their benefits, one area that stock brokers may be lacking is customer service!

The choice to select a broker for your investment portfolio makes a world of sense, and this is true whether you are dealing with a few thousand dollars… or even several millions of dollars. Some people may look down their noses at online brokerages because they charge a lesser fee for their services, and they don’t tend to be interested in chit-chat when taking orders on the phone or in person. This is not a bad thing, it’s simply business. It takes about the same amount of time for the brokerage to manage some stocks for any client, no matter how large or small the sum may be.

stock-brokersThose making use of a broker will usually have a wealth of information at their disposal, however. With online brokers there is often a glut of 24-hour information available for comparison and research, and investors can take full advantage of this to decide on their stock market strategies. With these tools ready and waiting, a savvy investor who understands this information and can apply it well will likely feel much more comfortable in dealing with an online broker. These investors know what they are looking for, how to accomplish their goals, and really need very little in the way of coaching or outside advice. However, newer (or less confident) investors who do not fully grasp all of the analysis at their fingertips might be more at ease with a traditional broker while learning the ropes a bit, and could later make the jump to an online broker.

The best advice for working with an online broker, then, is to learn the things you need to be successful as a stock investor. Once that knowledge has been gained, however short or long the time that it takes, then the future interaction with an online broker will be both streamlined and comfortable.

It can be tempting for individuals to consider moving away from an online broker as their net worth begins to grow, just because money managers seem to have a special cache for the wealthy. However, investors should ask themselves if this move “up the ladder” is always the best choice? It is not hard for people to become a bit “pound foolish”, as the British say, once they have more money to be managed. For many people, they can manage their sizeable accounts every bit as easily online as they did when they were just starting out. In fact, it may be even more satisfying.

Once an investor has learned how to research the stock market well, and has seen success with his or her efforts, is that really the time to start asking someone else how to do things? Sticking with an online broker – for the right reasons – can make all the sense in the world… even once the investments have really started to improve one’s quality of life!

Options on Gold Stocks, The Basics of Option Trading

A significant number of our users have asked us to provide a resource on options trading and related definitions of call options and put options. Here are some basics and we will follow up with further examples of Gold stocks and options.

A call option gives its holder the right to purchase an asset for a specified price, called the exercise price, on or before a predetermined expiration date. For example, a November call option on Apple stock with an exercise price of $600 entitles its owner to purchase APPLE stock for a price of $600 per share at any time up to and including its expiration date in November. The holder of the call is not required to exercise the option. Only if the market value of the stock to be purchased exceeds the exercise price will it be profitable for the holder to exercise. When the market price does exceed the exercise price, the option holder may either sell the option or “call away” the asset for the exercise price and obtain a profit. Otherwise the option may be left unexercised.

If it is not exercised before the expiration date of the contract, a call option simply expires and no longer has value. The purchase price of the option is called the premium. It represents the compensation the purchaser of the call must pay for the ability to exercise the option if exercise becomes profitable. Sellers of call options, who are said to write calls receive premium income now as payment against possibility they will be required at some later date to deliver the stock in return for an exercise price lower than the market value of the asset. If the option is left to expire worthless because the exercise price remains above the market price of the asset, the (aside from transaction costs) the writer of the call clears a profit equal to the premium income derived from the sale of the option.

A put option gives the holder the right to sell an asset for a predetermined exercise price on or before an expiration date. A November put on Apple with an exercise price of $600 entitles its owner to sell Apple stock to the put writer at a price of $600 at any time prior to expiration. While profits on call options increase when the stock price increases, profits on put options increase when the stock price falls. A put will only be exercised if the exercise price is greater than the market value of the stock.

An option is described as in the money when its exercise would generate a profit for its holder and out of the money when its exercise would not be profitable. Options are at the money when the exercise price and asset price are equal.

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