We saw in the last section that once a company completes an initial public offering (IPO), its shares become public and can be traded on a stock market. Stock markets are venues where buyers and sellers of shares meet and decide on a price to trade. Trading stocks. Note: this list contains strategies that are easy to learn and understand. Each is less risky than owning stock. Most involve limited risk. For investors not familiar with options lingo read our beginners options terms and intermediate options terms posts.1.
Covered call writing. Using stock you already own (or buy new shares), you sell someone else a call option that grants the buyer the right to buy your stock at a specified price. That limits profit potential. You collect a cash premium that is yours to keep, no matter what else happens. That cash reduces your cost. With your bank details and a debit card, you can start trading almost immediately with just a few hundred pounds.
How can you protect yourself alongside this risk. Consider this story. If this comes about, you will have wasted one half of your money. Thus, just what should you do. You enter into a contract with ABC Company (difOptions trading can be tricky for beginners. Watch this video to learn how to trade options. For more information, please read the Characteristics and Risks of Standardized Options at before you begin trading options.
Moreover, there are specific risks associated with buying options including the risk of the purchased options expiring worthless. Commissions and other costs may be a significant factor.