Home » Investing » Options Trading

Options Trading

Options trading allows investors to buy and sell contracts that give the holder the right to buy or sell an underlying asset at a specified price within a certain timeframe. Investors can use options to speculate on the direction of an asset’s price or to hedge against downside risk.

There are two types of options:

  • Call options, and
  • Put options

Call options give the holder the right to buy an underlying asset at a specified price, while put options give the holder the right to sell an underlying asset at a specified price. Options can be traded through most brokerage accounts on exchanges, or over-the-counter (OTC).

Options trading is a versatile strategy that can be used to speculate on the direction of an asset’s price, generate additional portfolio income, or hedge against downside risk. For example, investors who are bullish on an asset can use call options to buy the asset at a lower price than its future potential. Similarly, investors who are bearish on an asset can use put options to sell the asset at a higher price than it would trade for in the open market.

Options can also be used to hedge downside risk. For example, an investor who owns a stock may use options to hedge against the risk of the stock declining in value. By buying put options, the investor can protect their downside risk.

Risks

Many will say that trading options is risky. However, the risks are similar to trading stocks. Investors should consider trading options only on underlying securities they’d like to own while considering the probabilities of a profitable outcome.

someone looking to invest in high dividend stocks

Selling Covered Calls For Income: Beginners Guide

Are you thinking of selling monthly covered calls for weekly or monthly income? If so, you came to the right place. Of course, if you landed here by accident, this article is sure to surprise you. As of , selling covered calls is still one of the most conservative income trading strategies that investors use …

Selling Covered Calls For Income: Beginners Guide Read More »

a trader looking selling VIX put options to generate income

Selling Weekly or Monthly Put Options for Income

Are you thinking of selling put options for weekly or monthly income? If so, you came to the right place. Selling put options is different than selling covered calls, however, both carry about the same risk, and are safe ways to generate income. But, what if you wanted to generate weekly or monthly income from equities …

Selling Weekly or Monthly Put Options for Income Read More »

an investor considering a leaps option trading strategy

Leaps Options Strategies: 2 Ways to Profit in A Bullish Market

Have you heard about LEAPS options trading strategies and wonder what they are, and how they work?  Or maybe you found this after reading an article, watching a video about leaps options, or trading in general and wanted something more – maybe something that made more sense to you.    In this article, I’m going to …

Leaps Options Strategies: 2 Ways to Profit in A Bullish Market Read More »

covered call trade ideas

5 Covered Call Trade Ideas – Target 5% By Oct 8, 2021

Are you a dividend investor?  What if I told you there was a way to double, or even triple your income without incurring much risk.  In this article, I’ll introduce you to 5 covered call trade ideas on quality companies – dividend aristocrats that will do just that.  I’ve organized the trade ideas from the …

5 Covered Call Trade Ideas – Target 5% By Oct 8, 2021 Read More »

nike iron condor

Iron Condor Option Trade In NKE Stock Could Return 33%

An iron condor is an income trade that profits when a stock stays within a specified range over the course of the trade. One key factor to look for when trading iron condors is a stock with high implied volatility. One stock that meets that criterion is Nike (NKE). NKE is currently showing an implied …

Iron Condor Option Trade In NKE Stock Could Return 33% Read More »

Stocks vs Options

Stocks Vs. Options: What Investors Need To Know

If investing is of interest to you, then you’ve probably heard about stocks vs. options. How can you make the best choice when deciding which investment strategy to use? After all, investing comes with risk attached – learning how to navigate that risk and make sound investment decisions is the key to building a good …

Stocks Vs. Options: What Investors Need To Know Read More »

robinhood vs webull - which is better

Webull vs Robinhood – Complete Review for 2022

Are you looking to trade and wondering the differences between Robinhood vs. Webull? Indeed, there are endless options when it comes to investing your hard-earned money. For example, some investors use an adviser, while others prefer doing it themselves with a low-cost brokerage such as Etrade or Schwab. However, startup brokerages such as Robinhood and …

Webull vs Robinhood – Complete Review for 2022 Read More »

15585

Stay in Touch With Us

Get latest from The Financially Independent Millennial in our Friday Newsletter

15856
Scroll to Top