How risky is stock trading?

Answer 1

If you own shares in any company, the only risk is that you may lose money on it. All stocks rise and fall with the part of the market they are attached to. If all you own are publicly held shares of a company, the only thing you would have to worry about is that company going out of business. You have never lost any money until you have taken it out of the market below the price you have bought it at, even if the stock has reached the bottom. The companies stock could go all the way down to 0.00, but if the company is still in business, it may still rise.

Answer 2

The amount of risk involved in selling a put depends on the reason you're selling it. Traders who sell puts so they can buy stocks they like at what they consider to be cheap prices incur NO risk in selling puts. Spread traders have a small risk. For this we need an example: you sold a put on 100 shares of Acme at $20 for a $2 premium. You'd take the $200 premium and put it in your margin account. If Acme stays above $20, the put won't be exercised and you're $200 to the good. If Acme falls to $19.75, you'll be exercised at $20. You'll immediately turn around and sell Acme on the open market. Deduct the $25 difference between the $20 strike price and the $19.75 stock price (times 100) from the $200 premium, and you're still $175 to the good. The only time you really get your butt kicked on a spread trade is if Acme falls below $18, and that's not likely to happen. Acme was above $20 when you sold the put--no one would sell a $20 put on a $19 stock, right? Let's say it's $22. If the $22 Acme sheds over $2, very few traders would think, "let's ride this one out just to see how rotten we can make life for the put seller." They're going to unload the stock as fast as they can. Theoretically you could lose your ass on a spread trade, but you probably won't. Traders who are gambling on the possibility the stock price won't cross the strike price threshold have the biggest risk of all: they might actually have to BUY the stock!

Answer 3

Any market related investment instrument bears a certain degree of risk and the same holds true for futures and options. Trading in derivatives is extremely speculative in nature and sustains on market volatility. Unfortunately, market volatility is what makes it uncertain and risky. Therefore, F&O trading is recommended for investors who have a high tolerance for risk.

If you have a high risk appetite, you can get in touch with GEPL Capital to trade in futures and options. The company offers a whole suite of financial market related services.

Answer 4

Stock trading does carry risk since the market does flutuate. There is no reward without risk.