What Are The Benefits Of Trading Stock Options – Try With A Free Virtual Account
Options Trading Offers More Flexibility
Although trading options isn’t suitable for everyone, it doesn’t change the fact that the trader can mold the trade to work for them in their favor. Trading options offer greater flexibility for both the options buyer as well as the seller.
Most other types of financial trading will not allow you to profit from the underlying asset. (What is an underlying asset? CLICK Here). But trading options however makes this possible. There are also a variety of strategies that traders can use to maximize this as well.
Options traders can also benefit from a protective put. This is an options trading strategy that involves purchasing the same amount of puts and stocks, so that the stocks are protected from depreciating. Also, an options trader who wants to buy an option at some point in the future, at a certain predetermined price can do so as well. You can look at it as insurance for the options trader, who has say investment on long stock positions. This is particularly advantageous during times when the market is uncertain.
Options Trading Offers Better Leverage
Options Trading Offers Limited Risks
Profit From Volatility Trading
When you are working within the principles of disciplined option trading, you as a trader have the ‘option’ to buy or not buy a particular option, depending on the market movement. This is a great benefit as you are not obligated to pursue that trade, even if you have already lost interest on it. The only capital you can lose is the payment of the option, which is significantly lower when compared with the price of the actual stock.