BTO Acquire to Open BTC Buy to Close STO Market to Open STC Promote to Near Each Alternatives deal one hundred shares Contact Disperse When you anticipate the stock cost will rise in todays stock current market On February 6, 2011, XYZ Firm closed at $forty four.eighty two. If you wished to purchase 100 shares of XYZ mainly because you felt the stock price tag will carry on to rise, it would price tag you $four,482.00 (one hundred shares x $forty four.eighty two). You could accomplish the similar objective making use of possibilities but at a greatly decreased expense. You could purchase 10 contracts (a thousand shares) of the July 45 get in touch with (trading at $two.87 bid / $two. binary options trading systems 92 question), a debit and promote ten contracts (1000 shares) of the July fifty phone (investing at $.96 bid / $1.00 inquire), a credit. The variance would be $1.91 (two.87 - .96) bid and $1.ninety two (2.92 one.00) inquire with 157 days to earnings. If you placed an order at a limit cost of $1.90, the phone disperse would price tag $1900 as a substitute of $four,482. BTO 10 XYZ Jul 45 call & STO ten XYZ Jul 50 simply call for $1.90 $1900 (debit) You would have the difference of $2,582 ($4482 $1900) to make investments in other shares or selections. As an alternative of putting all your eggs in one basket, you have achieved the same aim (1000 shares) but have funds left to commit in other stocks or possibilities and consequently minimized your losses. If the call spread solution price tag rises $.50 to $2.forty, you could shut the get in touch with pass on as a unit for a revenue of $500 (credit of $2400 debit of $1900). STC ten XYZ Jul 45 phone & BTC ten XYZ Jul 50 contact for $two.40 $2400 (credit) If the stock value of XYZ drops after the trade, you could buy again the July fifty, a person leg, for a decrease selling price then you acquired which is binary options a gain. Then wait around for the stock cost to proper (rise) and then promote the July 45, the other leg, for additional than you compensated for a earnings on each legs before mid July. If you decide on to shut the contact pass on a single leg at a time as an alternative of as a unit, generally shut your largest liability very first. In this instance, it would be the leg that you marketed which is the July fifty simply call. Bear in mind - Usually invest in sufficient time for your selections buying and selling strategy to get the job done and use cost alerts. Bob has been an active trader in options considering that 1982 and is the President of Sweet Desires Investing Corporation.