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Open your Trading account in mintues with Zerodha

Online brokerage is the amount charged from online traders to trade online in return of better assistance to deal in stocks. This brokerage is paid to brokers who act as facilitators of trading in stock exchange.

One of the more interesting aspects of options is that they can be extremely speculative and risky, or the most conservative of strategies. It all depends on whether you are a buyer or a seller, and on whether you own the underlying stock.

Because time value evaporates, buyers see time as the enemy. For sellers, though, time is a great ally. The more time value involved, the higher the potential profit; and the more that time value falls, the better. When you enter the order for an opening sale transaction, you are better off if you have the maximum time value possible.

After you pick up a stock brokerage, you should get a trading account opened there. Opening account may require some of the formalities including bit of easy paperwork. Completing the paperwork and submitting the initial amount will let the broker to get your access to the world of stocks.

Every investor is in need of some guidance to understand the wavelengths of stocks fluctuating world and the online brokers acts as facilitators for better trade. They try their best to make optimize usage of the investments made by online trader in return of an amount called brokerage.

Exercise is not always generated by a buyer’s action, either. The Options Clearing Corporation can execute an automatic exercise on options in the money on expiration date. The OCC, acting in the role of buyer on the other side of the short position, would benefit from exercise of in-the-money short options.

Option transactions occur through the exchange on which an option has been listed. While several different exchanges handle options trading, and automated trading has become widespread on the Internet (especially in options), there is but one registered clearing agency for all listed option trades in the United States.

Quick Changes Artist: You have decided to buy a call with a striking price of 30. The underlying stock’s current market value is $32 per share and the option premium is 5 ($500). Your premium includes two points of intrinsic value and three points of time value. If the stock’s market value does not increase enough by expiration to offset your cost, then you will not be able to earn a profit.

What happens if the seller does not deliver shares as demanded by the terms of the option contract? The OCC facilitates the market and enforces assignment. The buyer is given timely possession of 100 shares of stock, even when the seller is unwilling or unable to comply. The broker will deal with the seller by attaching other assets as necessary, or taking legal action, as well as suspending the seller’s trading privileges.

Selling Short – Making money when markets go down!