There are many ways to make the investment in the stock market.
Each method has its own pros and cons.
A person desiring to make investment can select a method most suitable to his strategy and capability.
The ways by which you can make investment in the stock market have been explained below: 1.
Purchasing preferred stock Purchasing a stock and then keeping the investment in it for a long duration is the easiest way of investment.
You money grows with the company or may even shrink if company goes into losses.
You may not be required to make any instant decisions to buy or sell the stock because you are there to hold on to the stock for a long duration.
2.
As stock options You can also make investment in the stock market through the stock option.
This allows you to buy or sell a security before or at a given due date.
These contracts have a short life cycle and move either upwards or downwards within a shortest time period.
These needs to be managed actively as they expire at a set time and carry a large risk.
3.
Through leaps Leaps are similar to options but they have a larger expiry period.
Options usually expire in few months but leaps may not expire even for one or two years.
It is a compromise between stocks and the options.
4.
Through option spreads A combination of stock, leaps and options are termed as option spreads.
For example if you purchase a stock and then offload a call option on that stock, it is called a covered call, an option spread technique.