The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “What does BP effect in stocks mean or more specifically, what does buying power effect in stocks mean?” When you're actually trading, it’s actually pretty simple to understand. But when you’re trading, whether it’s stocks or underlying options, whether you're buying options, selling options, doing simple strategies or complex strategies, all that BP or buying power effect means is that is the amount of money that comes out of your account or gets set aside in your account to cover that position. Now, I say that it’s two of those because it's not necessarily both. That money is always coming out of your account. For example, if you buy stock, money would come out of your account for the purpose of purchasing shares of that stock. Now, you have stock that's valued at the same amount as where you purchased the shares, but you actually forfeited the right to the money by bu