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No. An option is the legal right to buy stock at some time in the future at a pre-arranged price. You can buy a stock option, but it doesn't entitle you to the actual stock until you exercise the option. Buying on margin means that you're currently purchasing the actual shares, but you're borrowing part of the money you're using to do so from your broker.

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16y ago

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Why did people buy stocks on the margin in the 1920s?

Same reason they do today....leverage. Buying say $1,000 of stock that you believe is going up...and it does say 20% earns you $200. On margin, the same $1,000 may get you 3 times as much stock, so the same events makes you $600 - or 60%, (minus a small interest and carrying expense). The numbers aren't quite right, but the theory is. The SEC won't allow you to borrow more than half the purchase price of the stock you're buying on margin. If you have a margin account with a $5000 maintenance margin (the amount of money you MUST leave in the account) and you have $15,000 in there, you have $10,000 of usable cash. You may then borrow up to $10,000 on margin. The reason for this rule is, of course, because buying stock on margin is one of the major factors in the Great Depression.


What is the difference between investing in the stock market and futures and options trading?

Options and futures are derivatives of Stocks. This means that options and futures derive their value from the stock that they are based on. For a simplistic explanation, a call option with a strike price of $10 gains $5 in value when its underlying stock rises by $5 above $10. If the stock does nothing, then no value is gained. As such, buying options or futures isn't the same as buying the stock itself because by owning these derivative instruments, you do not own the stocks they are based on.


What is the process of selling and then buying back the same stock called?

The process of selling and then buying back the same stock is called a "round trip trade."


When one is buying options is it the same as leasing with option to buy?

When you are buying options it is considered the same as leasing with the option to buy. You can consult with your financial adviser for additional information on this process.


Is it possible to profit from both selling and buying the same stock?

Yes, it is possible to profit from both selling and buying the same stock through a trading strategy called "buying low and selling high." This involves purchasing the stock at a lower price and then selling it at a higher price to make a profit.


What is options investment?

Options investment or options trading, is the buying of options on stocks rather than the stocks themselves. Owning the rights to buy or sell the stocks at a certain price allows you to control the same amount of shares at a fraction of the price, hence LEVERAGE. Yes, the main beauty of options trading is leverage. When your "bet" is correct, you can make as much as 100% return when the stock moved a mere 10%.


What is the definition of a margin loan?

The definition of a margin loan in it's simplest term would be a loan which is taken out to finance the purchasing of equity , usually in the form of some sort of stock. The loan is normally requested and agreed by the same stock broker that the customer is using to trade with the equity they wish to purchase from.


What are the options for buying and selling investments on the same day?

The options for buying and selling investments on the same day are known as day trading. This involves quickly buying and selling stocks, options, or other financial instruments within the same trading day to take advantage of short-term price movements. Day trading requires a good understanding of the market and carries a high level of risk due to the fast-paced nature of trading.


Can you explain the definition of a split strike conversion?

A split strike conversion is an investment strategy where an investor buys a stock and simultaneously sells call options on the same stock. This allows the investor to generate income from the options while still holding the stock.


Where can buy shares by PayPal?

PayPal is actually by the Internet giant eBay. eBay is traded on the NASDAQ. Buying eBay stock is almost the same as buying PayPal.


Why tips could be viewed as similar to stock options and why the delays and incorrect orders could represent a case of agency costs?

the tips are as same as the stock option because they have the same characters


What is quadruple witching in relation to the stock market?

Quadruple witching is the date on which contracts for stock index futures, stock index options, stock options and single stock futures all expire on the same day. These days occur on the third Fridays of March, June, September and December and lead to increased volume and fluctuations in the markets.