Stock options or forex trading, which is better?

Question

In terms of profit?
In terms of safety?

Answer 1

Both are risky and both are profitable

Answer 2

That would be the equivalent of asking, should I date and marry Beth or date and marry Sue? That depends - who is a more compatible match for you and will be a better girlfriend/wife? Both options and forex can offer great profit potential. In fx, you can only lose the amount in your account, nothing more. The same is true for options, only if you're buying options. If you're writing options, the potential is there for unlimited losses, depending on how you set up the short options trade. If you set up a naked short, oh yeah, the potential losses are unlimited.

The question you should be asking is which is better for YOU. Only you can answer that. Forex tends to trend very well, so you can have low volatility and still make money. Options almost by default require some level of volatility to make money if you're long the options, if your short, you want volatility to be falling. In options, you can have the underlying trending very well and still lose money on the option. When buying an option, you have to be right on 3 things:

1) Timing of the move - the stock must be the money before expiration.

2) Direction of the move - the stock must move in the direction of your options trade; up if you have a call, down if you have a put.

3) Magnitude of the move - the stock must exceed the strike price before expiration.

If you are wrong in any one of those criteria, you'll lose money. That's why you need volatility in options to make money. Also, the above criteria apply only to long options. For short options you need to find the probability of the option expiring worthless and then setup the trade around that parameter.

So, only you can decide which is better for you. For the first poster, he prefers stock options, another may come along and give a great argument for forex because that's what's better for them. I personally trade both forex and options (futures options, not equity options). I like them both and they provide what I need. Would I recommend them to someone else? Only if their trading style, risk tolerance levels and they fit the requirements of the person asking. What you should do is do as much research as you can on both of them and then come to the decision as to whether stock options, forex, both or neither are suited for you in terms of your investment style, risk tolerance levels and requirements of what you want to get out of your trading activity. One may fit better than the other, or both may fit or neither may fit. Each person has their own trading personality and must find which asset class or investment vehicle is best suited for their trading personality.

VC is correct, both of their pluses and both have their minuses. Hope this helps.

Answer 3

FX is more risky. At 100:1 leverage if the USD/EUR falls by one penny, you would hahave lost $1,000 (100%) of 1 lot. There is a way to make it less risky... turn down the leverage. Below 50:1 preferably. Forex in and of itself isn't that risky but due to the huge amount of leverage being used... it is. To trade effectively I recommend you learn a lot about the world's economies, interest rates forecasts, etc.

For options, pick a company you know will go up over the next six months, get a longer range option on it. Sell after it starts its climb. To trade options effectively, I recommend you learn a lot about the company you want to buy options about.

You can make/lose lots of money on both! You must find out which one you understand better. If the economics of a country bore you, then perhaps you should try options by learning about a particular company/industry. It's all user preference. One note: if you decide to go with forex, try not to make too many trades. Check the link below for an explanation why. The same note would apply to options due to the brokerage fees.

Answer 4

Stocks: Faster profit and Faster loss

Forex: Comparatively Slow profit and slow loss.

If you are a begineer, taste the forex first, basic concept and dealing behaviour is same. And once you get feel for it and have enough money to risk switch to stocks.

Safer advise: what money you can afford to loose or intend to invest in this trading account. Never use more than 1/5th of it for any open trade, So that you have 4 times the backup to stand in market.

Ex: You have 1000 USD in trading account.

NEVER have any open position which is requiring the amount more than 200 or may be 250. In which you have remain equity balance to back you up in case of uncertainity so that atleast you can stay in market when its against you and once it become favourable you can clear the trade and go off safe or may be at profit.

So rem 1/5 dear. wherever you go.

Answer 5

Binary options let users trade in currency pairs and stocks for various predetermined time-periods, minimal of which is 30 seconds. Executing trades is straightforward. The system uses user-friendly interfaces, which even an 8 years old kid, can operate without having to read any instructions. But winning trades is Not easy.
Binary trading is advertised as the only genuine system that lets users earn preposterous amounts of money in ridiculously short period of time. Advertisers try to implicate as if you can make $350 every 60 seconds; if it was true then binary trading would truly be an astonishing business.
However, does it make any sense? Can every trader make tons of money in binary trading? Who is actually paying all the money or the profit to traders?
The first challenge is finding a trustworthy binary broker; secondly, you need to find a binary trading strategy, which you can use to make profits consistently. Without an effective trading strategy, there is no way you can make money in this business.
Learning a profitable trading strategy is possible, You should watch this presentation video https://tr.im/16635
It's probably the best way to learn how to win with binary option

Answer 6

Profit? Options. Safety (what we call "risk")? Well, they're both about as safe as sticking a loaded gun in your mouth and then jumping on a trampoline. You may bleed a little slower with Forex, but you will bleed all the same.

Answer 7

I guess it all comes to the individual him/herself. FX trading is a very highly leveraged environment. The FX itself moves very little (percentage wise) from day to day. Options price, on the other hand, depends on the underlying securities. I've used both of them and found that option is more of my style. To make quick profit, FX is better (but that's just because of the leverage). Option gives you more protection. If you're a buyer, you can only lose the amount you invest in. As a seller, you can expect to see your options expire 98% of the time. Again, it all depends on your own knowledge and experience as the trader.

Answer 8

stock option is the best because lower cost & risk of investment and returns are high

Answer 9

You are comparing apples to oranges.

All depends on what you want to do with them. There is no such thing as "better" financial instrument than other.