Sometimes investors feel that they do not have sufficient leverage. When this happens, they find it difficult to use the opportunities that present themselves and make a profit from them. Penny options are one good way to gain leverage and build your portfolio at the same time.
A lot of stocks are priced incrementally for example, at five or ten cent increments. Penny stock pricing methods do not use increments but vary by pennies. Traders can increase their leverage with penny stocks because they can get into trading with less capital to start with and if their stocks should fail, they have not lost too much.
With penny options, you can make a profit in a relatively short time because you are playing in a smaller field and with less money. A lot of people like the penny stock idea because you cannot lose more than your initial investment. Options, as opposed to underlying stock, do have some drawbacks though. Penny options can change massively in a short period of time. These might be positive changes for you or negative.
It is important to find out whether a penny option would suit your requirements. A penny stock might be cheap but perhaps the liquidity...
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