LEGAL TRANSACTIONS IN CAPITAL MARKETS IN THE UNITED STATES

After applying X system I get the results of 200% in one month through a stock option contract. Thus the sound of Mr. Y in a testimonial advertisement investment training at a business daily. In the yard next to no news united states capital market watchdog, which accused Goldman Sachs cheated when selling COLLATERIZED Debt Obligation (CDO). To the extent the information these CDO transactions have become one of the causes of the global financial crisis in 2008. Investors should recognize the workings of KOS, because the market likely will be offered this product, remember that
basic

principles INVESTMENT: DO NOT EVER BUY A PRODUCT THAT DOES NOT IN GOOD familiar with.

KOS is a financial product, which entitles the holder to buy shares at a specified price at or before a specified time (expiration date). This may be a form of right to buy or sell the rights. How to get the buyer must pay some money KOS that called PREMIUM, for which the purchase rights, no obligations to holders of KOS uses of such rights. Analogues such as purchasers of health insurance, the policyholder only exercise his right if the sick.

KOS like a double edged sword, on one hand can be used to protect investors from losses due to fluctuations in stock prices. on the other hand can be used as a tool of speculation, for example, on 21 Mey 2010 we plan to buy shares microsof Inc (MSFT) a month to be dating. The price was U.S. $ 31.3. if worried about MSFT stock price will go up we may buy a call option, for example, only with the execution of U.S. $ 30 and will mature on 21 June 2010. There are various options in the offer price. MSFT information can be found at http://finance.yahoo.com MSFT code input, and select the option in the left pane.

When due if the price is above U.S. $ 30, we can execute him. one share of the gain by paying U.S. $ 30. If the price is below that then we do not need to execute them because they can buy in the WALL STREET. So call option gives the insurance to investors that the maximum money for the purchase MSFT U.S. $ 30, even less, easy is not it? But this flexibility must be paid with a call premium of U.S. $ 1. In fact, KOS more in use for speculative purposes, if speculators predict the stock price will rise, he would buy a call option, if the suspect prices will come down to membelu put option, in the State who advanced capital market, the transaction value KOS could match or even exceed the value stock transaction. KOS speculation using more fantastic results in comparison to the stock of direct investment.

For example we only have funds amounting to U.S. $ 31.3 and stock price estimates SMFT and predicted to rise in June 2010, there are two alternatives to make a profit:

FIRST
The funds used to purchase a share of MSFT. If MSFT stock on June 21 increased to U.S. $ 35 the yield amounted to U.S. $ 3.7 or 11%.

SECOND
Buying a call option with exercise price of U.S. $ 30 because the call premium of U.S. $ 1 we could buy the 31 rights to buy 31 shares at a price of U.S. $ 30 if the MSFT stock price rose to U.S. $ 35 we will execute the purchase rights, the profits of U.S. $ 5 per-call option, because we have the right to buy as many as 31 stocks we have a total gain of 155, equivalent to 400% is much higher than in the play shares with almost the same capital.

So really KOS can make us feel the early retirement pension benefits in our working lives? The answer is yes, but KOS can also make people become poor in a very fast time. What if the stock price to U.S. $ 25? scenarios make the computation of loss per share purchase on purchases in the range of U.S. $ 6.3, equivalent to 100% loss, why? When MSFT stock price is lower we can not use the right to buy, because it was past due, the right was sunk and we lost all the money to buy these rights.

There are two things that make highly risky KOS:

FIRST
KOS member or leverage what we know with the title LEVERAGE, to speculate on a bigger budget than on their own funds, on KOS that we buy is the right to buy shares, not buy their stock. In the example that I have posted the above we can see and conclude that the KOS we can buy shares in the amount of 31 shares with the same fund. but the dangers of purchasing the rights can be lost in a quick time if we can not use it with both EX: price prediction that one could make the devastation on our transaction by using the KOS or LEVERAGE (which usually use the term leverage in the transaction of stocks, bonds, index capital markets and the trade transactions in currency values or commonly called FOREX TRADING.

SECOND
KOS maturities relatively short, only about a few months.
These two elements increase the risk of speculation, the play KOS we hope can get high profit, but if we are wrong in the pace and determine the price we can live a life could be like a sweatshop our lifetime.

Hopefully, YOU CAN BE A brokerage TRANSACTIONS AND UNDERSTAND THE LAW CAN MAKE GETTING YOUR BENEFITS ARE WORTH