Hello guys, Welcome to Africa's Largest Video Search Engine, and you are watching How to Calculate Options Leverage. and this video is uploaded by OptionsTips at 2017-03-11T08:41:03-08:00. We are just promoting this video only for entertainment and educational purpose only. I hop you like our Video Search Engine. [adKq3WAZZaw]
| Name | How to Calculate Options Leverage |
| Video Uploader | Video From OptionsTips |
| Upload Date | This Video Uploaded At 11-03-2017 16:41:03 |
| Video Discription | http://www.options-trading-education.com/24431/how-to-calculate-options-leverage/ How to Calculate Options Leverage Leverage is one of the reasons that people trade options instead of buying and selling stocks directly. How does options trading leverage work? First of all you can control a larger number of shares for less money on a call option than by purchasing the stock in question. And second, when the stock goes up in price you have also leveraged you profits by having purchased the call options. Here is how to calculate options leverage. Leverage When You Execute the Trade How to calculate options leverage is fairly simple if you execute profitable trades. As an example, you purchase calls on XYX Corp. for $200 for 100 shares. The stock sells for $100 and the strike price is $102. In our example the share price goes up to $112 a share and you execute the contract allowing you to buy 100 shares at $102 and then tur around and sell at $112 a share making a profit of $10 x 100 shares = $1,000 minus $200 for the premium. To make the numbers simple we ignore fees and commissions and we get a 400% return on invested capital. If we had purchased the stock for 100 shares x $100 = $10,000 we would have made a profit of $1,200 or 12%. Adjust these numbers for fees and commissions and the point is still made that you can significantly leverage your trading capital with a successful options trade. And if that stock had gone down $100 in price you would have only lost $200 on your options trade instead of $1,000 on the value of the stock that you purchased. But what if you simply exited your options contract because you did not have a margin account with sufficient capital to buy and sell shares? [adKq3WAZZaw] |
| Category | News & Politics |
| Tags | Call Options | how to calculate options leverage | Put Options |
