What are options?
Options are a sort of derivative contract that, in a financial setting, allows the holder the right—but not the obligation—to purchase or sell an underlying asset at a defined price within a given time frame. Stocks, commodities, currencies, or other financial instruments might be the underlying asset.
Options give traders and investors the freedom to bet on the price movement of the underlying asset or to protect against future losses. They can be utilised for many different tactics, such as leverage, income generating, and hedging.
There are two types of options:
The right to purchase the underlying asset at a specific price, known as the strike price, before or on a predetermined expiration date is granted to the holder of a call option. The holder of the option may exercise it and make a profit by purchasing the underlying asset at a lower price if the market value of the asset exceeds the strike price.
The right to sell the underlying asset at the strike price before or on the option’s predefined expiration date is provided by a put option. The holder of the option may exercise it and make money by selling the underlying asset for more if the market price is less than the strike price.
What are Options Strategies ?
Traders can use more than 450 different options strategies overall. These option combinations give traders and long-term investors a great deal of freedom and allow them to trade the markets in various ways.
But mastering every tactic is not necessary. You can begin by using some of the most efficient and simple tactics, and then expand from there.
Options strategies are particular arrangements of options contracts that traders and investors employ to accomplish certain goals or control risk. These tactics entail buying and/or selling many options contracts with various strike prices, expiration dates, and underlying assets at the same time. The following are some typical option strategies:
Some of the know options strategies
Click on the strategy or the image to go to the full page.