Introduction

So, what is Options trading? 

 

Okay belay that.... what is TRADING? Or TRADE? Mostly trade is a form of business where two parties are involved in transacting an asset. Out of the two parties one is the buyer, and other is the seller. So one wants to give away the asset for monetary gains while other wants to acquire the asset for monetary gains.

Both parties see a potential gain in their end of the transaction. And that is where they enter an agreement to exchange or transact the asset. This exchange of asset is called a trade. And it works with money of course. Doing this exercise again and again on a period of time is called Trading.

Now trading the asset is conventional cash trade. Or EQUITY. Now EQUITY is mostly safe in the sense that its not time bound. If you buy an asset in cash, you can hold it till you die. Of course assuming that you bought it as a NRML or normal trade. There are types of trades, and most equity traders take trades for medium to long term. Equity trades while safer, because they are not time bound, are also slow with returns. If you bought equity shares and the shares dont move to a profitable position for 6 months or 1 year, you will be stuck with those shares and won't be able to move your money around to other profitable trades which you might see.

Because of this drawback, most new traders look for other forms of trading which, while being at a disadvantage of being time bound, may give out more gains. Of course possibility of more gains comes with the possibility of more losses too which is why trading becomes a very difficult business for new comers, who go all in, like gambling and loose big. They might even quit the markets if they get demotivated.

So this other form of trading is where futures and options come in. Shortly called as FnO, most of the seasoned traders advise new comers against this form of trading because the skill patience and adaptability requirement is quite taxing even for seasoned traders. So most of those traders are not wrong to warn the new comers to stay away from FnO, considering the risk. 

So, if you cant handle the stress and risk of FnO, I suggest you look at other ways of earning through investments. Banks and MFs might be a good starting point, but again please make your assessment before entering into any agreement. Its better to be safe than sorry.