Investment of the financial instruments and their influence on the exchange stock market development

Анотація

The formation of recently developed capital markets and expansion of investment alternatives inspires the investors to apply for the challenging investment strategies or search new alternatives for their capital investment. The paper states that among many other investment alternatives, stock market has a number of advantages, namely -the transparent procedure of the exchange market pricing and a variety of trade instruments allowing the potential investor to invest the capital in order to gain profit on a constant basis and in general to create an investment plan completely satisfying the requirements for material security, for financial independence achievement, or for creating own retirement account. The paper reveals that the prospect of profit completely levels risk of loss, despite short-term corrections of securities market and the crisis periods due to the fact that the growing trend proceeds much longer in relation to so-called "waves of corrections" and lasts about 10-12 years, it is in turn connected with business cycles which are overestimated on the stock market acting as the economy indicator in general. It is evident that investment operations in the stock market certainly make profit in the long term, however on the condition of investment portfolio active management it is possible to achieve significantly more profitability if correspondingly they will use speculative operations on shorter periods of time (from 1 week to several months) that is aimed to combine several tools in the trade strategy for maximizing potential profit and minimizing the possible risks. The authors proved that due to options it is possible to reach 30-40 % of annual portfolio profitability on condition of their proper use. Speculative strategies combining purchase and sale of several types of options enable to define the limit of possible risks and potential profit.

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