Figures stated are as of January For related reading, see: High-priced stocks are often perceived as over-valued, with little or no room for further appreciation, while low-priced stocks are seen to have more growth potential hence investors tend to go after penny stocks. Stock splits generate more liquidity due to low prices, which leads to more market participation, which includes small investors. The Lowdown On Penny Stocks.
WSJ provides the following data about stock performance being better in the long run, subsequent to a split:. But there are other ways to trade Apple through low-cost options. Options trading not only allows a lot of flexibility to match the stock trades at a fraction of the cost, but also enables investors to create different combinations with varying returns to suit their risk appetite.
Measuring And Managing Investment Risk. First things first — decide your time horizon for investment in Apple. Understanding Risk And Time Horizon. Will the price go up long stock position or will it go down short position in the desired time horizon?
The company has maintained its top spot even after the passing of Steve Jobs. Why Is Liquidity Important? However, the downside is proportional. Long and Short Call and Put Positions. However, the short put will require margin money, which varies from broker to broker. In this case, more leverage leads to high returns and relatively lower risk potential. A bull call spread will be ideal. Similar to above price appreciation scenarios , Apple options and combinations can be created for declines — long put, combination of short call and long put , and bear put spread positions.
Apple options are highly active and liquid, enabling price fairness and competitiveness. Using options to replicate stock positions at a fraction of the cost has the benefit of leverage high returns and the ability to apply various combinations to suit the desired risk-return preference. Along with standard options traded in lot size of , mini options are also available in lot size of But option trading comes with risks of high loss, margin requirements and high brokerage charges.
Moreover, stocks can be held for an infinite period, but options have expiry dates. Traders attempting to replicate stocks with options should remain alert of the pitfalls and trade cautiously. Dictionary Term Of The Day. A conflict of interest inherent in any relationship where one party is expected to Broker Reviews Find the best broker for your trading or investing needs See Reviews. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.
A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. Is Apple Stock Too Expensive? WSJ provides the following data about stock performance being better in the long run, subsequent to a split: Trade Apple stock through options and option combinations Options trading not only allows a lot of flexibility to match the stock trades at a fraction of the cost, but also enables investors to create different combinations with varying returns to suit their risk appetite.
It is comprised of: The Bottom Line Apple options are highly active and liquid, enabling price fairness and competitiveness. No thanks, I prefer not making money. Get Free Newsletters Newsletters.More...