Types Of Option Investors

There are different styles and types of option investors that exist in the option market. Option investors use the option market to build their investment portfolio so that they can see a long term profit that takes place over a long period of time.

Someone who is just using the option market to make money quickly for a short period of time is called a “trader”. Members of an investment group fall into the first category: they are in the investment market for the long haul.

There are different types of option investors that use different methods to analyze the market and the market conditions.

The three methods that option investors use for analyzing the market are:

· Technical analysis. This method of analysis is used by “momentum” option investors. Technical analysis looks at the price fluctuations that occur in the option market. The option investors base their decisions to buy or sell on what he feels the price will do next.

· Fundamental analysis #1. Fundamental analysis is used by “growth” option investors. This type of analysis decides if a certain company is a good investment based on the earnings of the company, growth sales, and margins of profit.

· Fundamental analysis #2. “value” option investors use this type of analysis. This method of analysis is similar to the analysis that growth option investors use, but is slightly different. Value option investors takes a close look at those companies in the option market that have a low value. The option investors look at options that are currently cheap and low but that have the potential to make a good comeback.

Most investment clubs use the fundamental method of analysis to make most of their investing decisions.

They find companies that are listed on the option market that show good growth, profit, and earnings but that are still cheap to buy and haven’t yet reached their potential.

Members of the investment club buy this option and hold on to it for several years so long as the fundamentals, as listed previously, continue to hold strong. This type of investment strategy is called “buy and hold”.