What is the best sector of the stock market as a beginner, to buy stock options?
August 4th, 2010
I want to begin buying stock options, but I do not know what sector of the market to start in this economy. I am looking only for moderate return on my investment. I only want to get my feet wet so to speak, and not get burned. My funds are very limited. Any suggestions?
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If your just starting out you may want to just buy the stock, unlike the options stocks won’t expire. A stock option will let you enter a position at a lower cost but you assume more risk. The values associated with options are time value and intrinsic value, the further out in time you are from the expiration date the more valuable the stock is but the closer you get to that date the cheaper it becomes. The stock however will go up dollar for dollar and then you can sell and take your profits.
As to what sectors are good right now, there are a lot of undervalued good stocks that are ripe for the picking and you can hold them and realize a nice profit in a few years. But for safety sake you may want to stay with basic grocery,material, energy, metal stocks. They will always be in demand and there is only so much to go around. Watch Jim Cramer on Mad Money and he will help you understand more of what the market is all about.
Actually your question reveals that you have no working knowledge of options. They are probably something you read about.
Sectors have very little to do with options.
I have always had very good experiece selling covered call options. That means you have to own the security. Never do naked options or if you do make sure you have plenty of personal lubricant on hand because you are ready to take a screwing.
I reckon that something about stock is a very risk. And you are right that you can get burn easily. If you live in USA, there are a very good place to go. You can go to address during office hours and get the best deal with your funds budget.
They have the best robot on the earth and alreday help many people to make money. Be careful with any online stock, that looks genuine but they haven’t provide you the real address and phone numbers – fake address.
If you can’t make any return of investment, ask for your investment back during 60 days period.