Options Trade of the Week
Monday, August 18, 2014
Financial leverage is one of the biggest benefits of trading options. Leverage is created by making your investments work harder for you to maximize profit. In other words, leveraging is creating potential for bigger gains using a smaller amount of capital.
Financial leverage is usually created by using other people’s money in an effort to maximize future profits. Mortgages are used to invest in real estate, and companies borrow money to expand operations. The benefit of the leverage comes from increased property value, or higher company revenue which raises the value of stockholders’ shares.
For the investor, however, buying options provides inherent financial leverage. Without needing to use borrowed capital, by investing in options, you can control a larger number of shares for the same initial investment, than if you purchased the shares themselves.
Stamps.com Inc. (NASDAQ: STMP), a provider of Internet-based postage solutions, definitely fits into this leveraged category and to top it off it also looks like it could be on the verge of a breakout.
Read the rest of the report and find out the recommended options trade …..