Trading options involves purchasing and selling an underlying asset at a pre-determined price by a specified future date.
Compared to a simple brokerage account for stock trading, an options trading account usually requires greater capital involvement.
After successfully opening the options trading account, you must decide on the type of options contract you want to enter.
An option contract is valuable only if the underlying stock price closes the option’s expiration period “in the money,” i.e., either above or below the strike price.
All options contracts have an expiry date, ranging from days to months to years. This period, too, cannot be conjured up from thin air.
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