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Introduction to Option Trading Fundamental
Analysis/ Stock Market Fundamentals
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OPTION TRADING TOOLS
There are two conventional ways to study the movement of the market. Fundamental and Technical Analysis. However, it is probably difficult to find purist for any kind of method nowadays as the availability of charts and information means that there is a greater bandwidth for analyst to study both information to create a better judgement towards to stock pricing.
It is not easy to make a fortune from option trading, but with the help of the correct tools, we can gain consistancy in trades and help us make better decisions when option trading. Here are some of the tools and resource that would give us a better leverage.
FUNDAMENTAL ANALYSIS/
STOCK MARKET FUNDAMETALS
Fundamental analysis is the study of company’s financial data, it’s
economic position, competition and political climate for the purpose of
predicting the future business performance of the company.
A pure Fundamentalist believes that the stock price is related to the conditions of the market and that the company's profitability, cash flow, competition, management performance will indicate the eventual pricing of the stock.
Fundamental analysis maintains that markets may misprice a stock's value in the short run but that the trueprice will eventually be reached.
TECHNICAL
ANALYSIS
Technical analysis
is the study of the price patterns and trends that exist in the market.
There are various methods of study and many different patterns indicating
different market sentiments.
A pure Technical analyst believes that the stock chart is a reflection of the buying or selling sentiment of the market and that these would create patterns through time, hence, it has a certain predictive power in the studying of the chart trends.
Technical Analyst believes that the conditions that is studied by a fundamentalist is reflected in the stock price movement patterns already.
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