What are some of the most interesting financial products
Options: the best financial product
In my daily comment, I keep recommending options instead of other financial products. There are reasons for this, and I can prove that options are the best financial product.
Advantage options trading
In loose order, I'll show you the advantages options have over CFDs, certificates, knockout notes, and warrants. I also compare options with stocks and funds. Because even in the comparison, options have many advantages.
You can use options for all trading goals
I'll start with an overview of the benefits of options. You can find some of these in other financial products as well. But: You only have these advantages with options.
Options have high leverage
+ 100% profit and more are not uncommon in options trading. For example, you only need 1,000 euros to make a profit of 1,000 euros within a few weeks. To achieve the same profit of 1,000 euros with stocks or funds, you might have to invest 20,000 euros or more.
Options: Price manipulation excluded
The price of an option is determined by the price of the underlying asset (share, precious metal, index, etc.). There are also supply and demand, which determine the fair price of an option. No issuer can manipulate prices to the detriment of investors. Because there are no issuers for options. In contrast, with derivatives from issuers, an investor always acts “against the bank” in the truest sense of the word.
Options: The issuer's risk of insolvency excluded
Options have no issuer. Therefore, there is no total loss of invested money due to the insolvency of the issuer of the securities.
Options: Use falling market prices for profit
You can make profits in any market situation. Put options also give you a profit when the markets are falling. Shares and funds lose money during this time.
Options: Securing depots is child's play
Put options allow you to make a profit when the markets are falling. Shares and funds lose money during this time. You can therefore perfectly hedge share portfolios with put options. That is certainly not possible with put warrants.
Because especially in the event of a crash, when the puts show their strength, the risk of bank failure increases and the associated total loss of the money invested in warrants increases. In this case, not only is the hedge lost, but there will also be additional losses due to the total failure of the money invested in the corresponding warrants. This is ruled out with options because there are no issuers.
Options: Clear and transparent equipment
Options have a clearly regulated and standardized configuration. This is summarized in a few lines. If you know the features of an option, you know them all. With funds, CFDs, certificates, knockout notes and warrants, you first have to read up to 150 A4 pages (!) To really know what you are getting yourself into. And you have to re-study these 150 pages each time you make a new investment. Because none of the features of one of these issuer derivatives is the same as the other.
Options trading possible with limited capital
Options trading only takes a fraction of the money you would need to directly trade stocks. For example, to buy 100 Porsche shares, you have to invest a good 4,000 euros. To control these 100 shares with options for well over a year and to benefit from their performance, around 600 euros are sufficient (prices May 2012).
Options trading is investor friendly
The futures exchanges are repeatedly praised by independent sources for their transparent rules for options trading. For example, almost every year in the “Black Book Stock Exchange” of the SdK (Protection Association of Investors). There, trading in options is compared to trading in certificates as exemplary.
Options trading directly in the USA "child's play"
It goes without saying that you should trade directly in the stock exchange's home country, the USA. This is very easy and possible on favorable terms. With options, you seize every opportunity. In the case of CFDs, certificates, knockout notes and warrants, the issuer determines what is traded. And there is no product from this provider for countless attractive profit opportunities from US stocks.
There is no obligation to make additional payments for options that have been purchased
With purchased options, you have no obligation to make additional payments! At best, anyone who tells you otherwise has no idea or is lying.
Options: all advantages come together
Finally, let me say again, some of these benefits of the options give you other investments as well. But there is no other investment opportunity that combines all of these advantages.
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