For investors in Call Put options the essence of success is in the ability to predict the direction of prices. The more accurate the predictions are, the more profits will be made.
What are Stocks?
When companies want to increase their resources of finance they can publish shares on a stock exchange. Before doing so however, company directors must decide on how many shares will be published and at what price they will be issued. Therefore, companies employ investment bankers who will calculate a company’s overall value. This is a very complicated process about which this author has insufficient space to elaborate here, but suffice the following example to explain. Let’s say a company which makes electronic toys is estimated to be worth $50 million. Theoretically the company could issue five million shares at $10 each, or ten million shares at $5 each.
How is the Stock Price eventually decided?
When the shares are published on the stock exchange, stock brokers will tell prospective share investors about the company’s current strengths and weaknesses, and some details about what the company plans to do with the money they are trying to raise from the sale of their shares. These basic academic factors are what initially determine market sentiment for the share-stock price.
Stock prices are defined by different forces. The simplest of these are the forces of supply and demand for the stock itself on the stock market. These are the same forces that you can see taking shape on the graphs and charts represented on the Stern Options trading platform. But there are more subtle forces at work which we cannot see as obvious on a chart or graph for the stock price. For instance, consider the forces of supply and demand relating to a company’s products and services. If a company is seeing a growth in sales of its core products and services, market sentiment for the share-stock price will be reflected accordingly and there will be a growth in demand for the shares reflected in an increase of the price. Likewise, if the company is seeing a decline in sales of its core products and services, there will be a tendency in the stock market for shareholders to sell their shares, and the price will go down accordingly.
Other factors affecting the market price for stock-shares.
There are some general factors which can affect individual share prices, and about which individual companies cannot exert influence. Such as:
1. Gross Domestic Product (GDP).
Whether it is in the company’s home country or in the world in general, when the GDP figures are declining it usually means consumers are consuming less, and therefore, wages do not rise. That will mean the hypothetical electronic toy company will be anticipating less sales of its toys. That means its share value will suffer negative market sentiment. But, and that is not all, declining GDP figures will anyway cause stock market sentiment to become negative and shareholders in general might sell their holdings across the market in a bid to ensure against bigger losses.
2. Action of Central Banks.
Central banks routinely act to alter the interest rates which affect savings, loans and mortgages. This action has a general impact on the amount of disposable income in the economy and that consumers and investors have to play with in general. Over the past ten years since the 2008 global financial crisis central banks have reduced interest rates to near zero levels. They have done this to reduce the burden of loans and mortgages on incomes, and therefore, in order to create an environment where business can grow. Share prices have therefore increased in value indirectly in virtue of the action of central banks.
Binary Options investors are in the best position.
Binary options investors are in the best position because they are largely unaffected whether stock prices are rising or falling. Whether share-stock prices are changing value because of the success or failure of companies, because of GDP figures, or the actions of banks regulating interest rates, binary options investors are largely unaffected. The great attraction of binary options is not only the freedom it gives you as in individual to make profits from the financial markets, but the bare fact that you can make profits on stock prices regardless of whether they are rising or falling. Binary options are concerned with Call/Put situations.
Stern’s intelligent platform keeps you ahead of events.
If you want to invest in Call Put stock options, Stern’s online trading platform is the best. Stern’s platform automatically equips you with power to predict the direction of prices. All of the hundreds of different assets which you can invest in through the platform is represented with accurate and relevant tools to help you perform daily and moment-by-moment technical analysis. Stern will also send you regular signals by email to alert you to events shaping the markets on a daily basis. As well as this, the Stern Options website includes a comprehensive economic calendar that gives you the heads-up on market shaping events.