How often you have come across this question which says “How is the stock market?” I can tell you a lot of people who even follows the market will find it hard to give a descriptive answer to this question. At the most they may say that the index has fallen or risen few points.
This articles aims at providing answer to just that question, how is the stock market? This content is slightly more than an online stock market investing advice for its readers. It discusses how to read and follow the stock market.
Generally the market index is just a replication of the behavior and mood of investors. A falling market indicates a certain mood of investors and a rising market depicts other mood. It is very important for investors not to follow the crowds-mood and take it as online stock market investing advice. Such decisions are emotional and without rational thinking.
In fact the best online stock market investing advice will be to do the opposite of what the majority is doing in stock market. Even after so much evolution of stock market and new breed of qualified investors coming up the scene, still the earning shown in companies financial reports are the best online stock market investing advice that can be blindly followed by investors.
Observing Investors behavior is the best online stock market investing advice.
The best way to know investors sentiments is by seeing the number of ‘call’ and ‘put’ options for a particular stock (What is option investing?).
Online stock market investing advice (1) – Call Options: It is like authority given to investors to buy a share at a given price on or before a given future date. But in Call Options investors are not obliged to buy the share any how. Call Options are made by investors when they think that a share is bullish (price going up). If a share price looks bullish, investors are ready to pay a premium. In Call Options, if market goes up as expected investors make money, but if market does not go up as expected then they loose money.
Online stock market investing advice (2) – Put Options: Similarly, Investors invest in the stock market through Put Option. It is like authority given to investors to sell a share at a given price on or before a given future date. In Put Options investors are not obliged to sell the share any how. If a share price looks bearish, investors are ready to pay a premium. In Put Options, if market goes down as expected investors make money, but if market does not go down as expected then they loose money.
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If investors are buying more put options than call options it means that the market will fall. Conversely if investors are buying more call options than put options it means that investors think that the market is bullish and will rise in future.
Perhaps observing call and put options is the best online stock market investing advice that can be given to investors who likes investing for short term.
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