Are you wondering how do options work? If that’s the case, this is a good place to start.

In premise, stock options are contracts that provide purchase/sale rights to the buyer. But that’s a very simple way to look at it.

In this article, we will cover stock options with greater depth, as well as provide ample examples of how they work.

So if that’s something you want to know, keep reading to learn more.

Fundamentals of Stock Options: How Do Options Work?

As mentioned earlier, a stock option is a type of contract that provides the buyer with the right to purchase/sell shares of a company at a specific price within a certain period of time.

To provide context, you are the “selling” stock option now. The person who will be buying the stock options from you will pay a premium. Depending on the type of option, the premium paid out provides the buyer the right to purchase or sell the stock. 

It’s always easier to do one of the two: buy or sell, but never both. If the buyer chooses to buy or sell a stock before the expiration date, the buyer will be exercising their option. 

And as the seller of the option, you keep the premium, whether or not they made use of their right to purchase stock. Now let’s take a look at some of the common option types.

The Call Option

A call option is a great way to develop stable cash flow, as well as reduce the cost basis for companies that a person already has stock in. 

In premise, a call option is a contract that provides the purchaser the right to buy stock or any other asset from the seller at a pre-determined price within a certain period of time.

How Do They Work?

The best way to understand call options is to make use of an analogy. For instance, you can think of it as a coupon that someone would take to a supermarket when buying their groceries at a lower price.

However, in the case of a call option, instead of taking a coupon from an advertising pamphlet, they would pay the supermarket a fee to have the coupon for themselves.

So the parties involved are the buyer and supermarket. The buyer of the coupon will retain the right to buy their grocery at a certain price. If the buyer chooses to make use of this right, the supermarket is obligated to sell them the product at that price.

Whether or not the buyer purchases the grocery, the supermarket will get to keep the fee that the buyer paid out for the coupon.

So if you bought a call option, you have the right to purchase underlying stock from the seller at the specific price during a specified time frame. If you are the seller, you are obligated to sell the stock at the specified price. 

The Put Option

The put option is basically the complete opposite of the call option. In this contract, the buyer buys the right to sell the stock to the seller at a pre-determined price within a specific time frame.

With a naked put, one does not need to short the underlying stock. When you sell your put option, you are willing to buy a stock at a price that is lower than that of which you are selling for currently.

While waiting for the price to get lower, you will earn some income, and when the price does come down, you will be happy to buy again at a lower price than sold.

How Do They Work?

The put option increases in value as the underlying stock and its price decreases. Selling naked puts is a great way to earn money when you are definitely sure of the value of the business.

However, the only problem with using naked puts currently is that you might have to buy the stock at greater prices than that of which you are selling your stock.

A put option becomes more valuable as the price of the underlying stock decreases.

For instance, XYZ is selling their stock for $40 a share. You like it at $30, so you sell an option for somebody to sell their stock at $30. They pay you $1 for the option. 

Then the stock starts tumbling down to $20. The option holder will require that you buy the stock at $30. 

And because of the option, you are obligated to do so, so you’re stuck for 30% devaluation. 

Buying Stocks vs Trading Options

You purchase and sell options on an exchange, similar to how you would purchase and sell stocks regularly. However, there are some very distinct differences that are worth noting. 

For instance, the main difference between the two is that stocks will provide you with minuscule ownership of the company, while an option is simply a contract that provides you with buy/sell rights upon a stock.

Another difference is that option trades are not great for the long-term, and as many investors vividly speak out about stock, they mention that if you buy stocks, you should plan to hold on to them.

By the merits of their character, options are risky. However, the market will establish exactly how much risk is involved. In any case, you simply need to find trading strategies that work.

Stock Reviewed

We’ve answered the question of “how do options work?” so, now, you are well on your way to try making use of them if you deem so appropriate. In any case, it’s your money and your risk, so do what you must.

If you’re interested in similar articles, feel free to check out the rest of our finance-related categories.

We hear a lot about startups today. Entrepreneurship is on the rise, and every ambitious person is eager to introduce their startup to the world.

But have you ever heard of stealth startups?

These are startups that are working on a product or service while maintaining secrecy. They only wish to announce the product/service once it is ready to be sold to the public.

This business model has many benefits and is something you might want to consider for your startup.

We’ve prepared this guide to help you understand everything you need to know about stealth startups.

Here’s What to Know About Stealth Startups

Before reading further, make sure you find a way to find capital for your startup. Stealth startups depend on capital contribution. We suggest you read up on what is capital contribution to understand how it helps stealth startups.

Here’s what else you need to know:

1. Intellectual Property

One of the major reasons why a startup decides to opt for stealth mode is because it wants to protect its intellectual property. If you have a great idea for a product/service and want to make sure another company doesn’t steal it, you need to protect your intellectual property.

Keeping your startup in stealth mode ensures that the public doesn’t know about your creation until it is launched and protected under the law. This business model would want for patent approval instead of launching a product with ‘patent pending’ status.

2. Working Anonymously

There are huge benefits to working anonymously. When you run a stealth startup, you and your team can quietly work on projects without the scrutinizing eye of the media.

You don’t have to worry about skepticism, criticism, or any erroneous input from others. You can just focus on working. 

Many teams within stealth startups find it especially peaceful and productive to work anonymously. You’ll find that your team will likely work more efficiently and achieve better results.

3. Better Relationship With the Press

When you are running a stealth startup, you have a better relationship with the press. As you aren’t under the watchful eye of the press, you can choose to avoid them entirely.

Or, you can strike up a relationship with press outlets of your choice. You can reach out to journalists, publications, and other media outlets of your choice and provide them with updates on your startup.

You can give these media outlets exclusive information and exclusive rights to publish content on your startup. This way, you can choose to only work with media outlets that you trust and are credible.

4. The Next Big Thing

Once you start announcing your startup to the world, you can gain traction faster than a normal startup. If a startup is announced without a product/service being announced, it creates an air of mystery.

In the mind of the public, your startup will be offering ‘the next big thing.’ Think about it: if you watch a short teaser of a film, it often creates more intrigue than a two-minute trailer that shows more details of the film.

If you come across a well-designed website that states “COMING SOON” on the homepage, you are likely to be more curious about what the website will offer. In other words, less is more.

With a stealth startup, you can be as inconspicuous as you wish about what your startup will offer. That will generate hype for your startup and is likely to generate a high level of sales when you do finally launch your product/service.

5. But…The Hype May Fail

Of course, a stealth startup has its cons. One of the biggest fears of stealth startups is that the company might get overhyped.

At first, you will create the air of mystery around your brand. But if your brand gets overhyped, your potential customers might lose interest once the product/service is launched. There is also the possibility that your product/service will fail. 

If it does, your customers may not give you a second chance. When normal startups launch, they can improve their product/service after hearing customer feedback.

However, if your customers feel they have been let down from the hype, you might not get feedback at all, and they might be reluctant to give you a second chance.

6. Lack of Market Input

Another major disadvantage of stealth startups is that you won’t have a market input. That means that you won’t have a selected group of consumers who can test your product/service before it launches.

Many startups like to offer their product/service to a select group of consumers before launching it to the public. These consumers will give you honest feedback to determine what changes to make to the product/service.

If you are confident in your product, should only then can you consider going with the stealth startup route.

7. Needs A Firm Market

If you decide to launch a stealth startup, you need to make sure that you have a firm market. That means that you know there is a customer base for what you have to offer. To do this, look at the trends in the market. For example, if electric cars such as Tesla are selling well, this opens up opportunities for more electric car companies.

You can also do your research beforehand. Reach out to an audience with surveys and questionnaires – asking them if they would be interested in your potential product/service.

If you find that there is a demand for what you will offer, then you can opt for a stealth startup. Then you know that there will at least be an initial interest in your product/service when you launch it. You know that the hype will be worth it as the market already exists.

Launch Your Startup

Now that you know everything there is to know about stealth startups, you can decide whether it is right for your business idea. Make sure to do your research, find your funding, and find the right people to launch the next big thing!

If you want to learn more about running a business, check out more great content on our website.

Your eCommerce website needs to grab and hold attention in order to garner sales. However, if you are like a lot of site owners then you may be having a difficult time figuring out how you can grab the attention of website visitors.

The good news is that with a few tweaks of your website’s content you will have a greater chance of getting sales. Here is a look at some of the best strategies you can use to enhance the eCommerce experience.

1. Make the eCommerce Experience Easy

Make it easy for your website visitors to find products. This means that you should ensure that you categorize products.

You need to think about the intent of your customers and make it easy for them to find categories and filter down to find more specific items.

The more you can reduce frustration the more sales you are likely to make.

2. Showcase New and Special Offers Above the Fold

When you have a special offer on a product or it is new your visitors should know about it as soon as they get to your website. The best way to do this is to have a banner at the top of your site. 

This is where you should showcase it to get immediate attention. Put as much information as possible above the fold.

3. Get Feedback and Reviews

Feedback is essential to improve your website performance. It’s important to take a careful look at recommendations as your customers are the very ones who will give you the best ideas to improve your website.

Have areas on your website for reviews. Reviews are powerful they can help to sell your products. 

Develop a presence on social media and showcase these on your website as well. This will increase your trust level with customers which in turn increases conversions.

4. Try to Stay in Stock

There is nothing quite as annoying as going to a website only to find that the product of choice is out of stock. This is why it is important to have a product information management system.

Having a system in place to tell you when stocks are low is the best way to ensure that you are always in stock. A product management system also helps you to organize your products and see clearly which product is the most profitable for your store to carry.

Watch Sales Take Off

The eCommerce experience needs to optimized for customer satisfaction so that you can see an increase in sales for your business. You need to ensure that your products are categorized for easy access to product. 

Keep these products in stock as much as possible this will help increase customer satisfaction. Ask your customers for feedback so that you can make effective changes. Try to get reviews and create a strong social media presence to increase customer confidence.

If you would like some information on developing a blog for your eCommerce site please check out the Quickstart Guides.

Did you know that Google receives over 63,000 searches per second?

The global powerhouse is the first place most people turn when they need to answer a question—which offers an opportunity your business can’t afford to pass up. If you want to be part of the answer your audience finds, search engine optimization can help get you there.

But if you’re just starting out in the world of SEO, knowing where to start can be overwhelming. We’ve put together a list of the four common types of SEO you should know to make the most of your campaign.

1. On-Page SEO

As the name suggests, on-page SEO refers to the content on the pages of your website. The goal here is to help search engines understand the content on your page, and to establish the page as a source of authoritative information on the subject.

This type of SEO includes keyword research, which is designed to help you find the most appropriate keywords for the page, as well as keyword optimization to ensure that keyword appears in the right places. If you don’t already have written content, SEO services may include content creation as well.

2. Technical SEO

This type of SEO refers to the unseen elements on your website, including your backend structure.

To help search engines understand your website and recognize it as a quality site, technical SEO might include strategies that improve its speed and mobile-friendliness. It might also reorganize the site’s architecture or ramp up the security as well, in addition to many others. All of these strategies, of course, should follow the established quality guidelines.

3. Off-Site SEO

When search engines consider how your website should appear in the search engine results pages, they also consider the relationships your site has built with other sites. Off-site SEO (also called “off-page SEO”) helps connect you to other authoritative websites, building a network that establishes your content as a trusted resource for your audience.

To do this, off-site SEO will work to create high-quality backlinks to your site. Backlinks are links from other authoritative websites to your site, and they’re a great way to showcase your site as a good source of helpful information. Your off-site SEO efforts may include other strategies as well, including social media sharing and customer reviews.

4. Voice Search SEO

This is one of the newest elements of SEO, but it’s more than just a trend. With devices like Alexa and Google Home in many US households, it’s important to make sure voice searches pull in your information correctly.

Voice search SEO includes making your content more voice-search-friendly. This can mean organizing it into bulleted lists, setting the answers to vital questions apart from the rest of your content, or using popular vernacular spoken phrases in your written content.

Take Advantage of All Four Common Types of SEO

Weaving together all four types of SEO is crucial for mastering your online presence, generating leads, and making more money online. The right optimization tactics can make or break your business’s success, so it’s worth the extra effort of pulling in these strategies—or hiring an expert to do it for you!

If you’re interested in more of the business and technology tips that matter, check out our other blog posts for more guides.