Many of you probably would have heard about option trading meaning, but have never used it because someone told you that these are complicated products which only market experts can understand.
What they have probably not told you is that these are extremely powerful products which can be mastered by anyone through proper training and guidance.
| Table of Contents |
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| Three major form of analysis |
| The market is full of changes |
| To assume the next trend |
Why you should trade in Options?
Options offer two main benefits to every trader:
1. Unique risk-reward ratio
The most compelling reason to spend time in learning Option trading meaning & strategies is its risk-reward ratio.
“Option buyers enjoy unlimited profits, and limited losses”
Whenever we mention this in our classes, everyone sits up in full attention, since this is the only exchange-traded product which offers fabulously high rewards against limited risks.
When the Option buyer’s view on the market proves to be correct, he is rewarded handsomely. Even when he is wrong, he can at the most lose the premium he has paid to the seller.
2. Participate with limited capital
Options require a relatively small outlay of cash for participating. You can purchase an Option at a fraction of the price of the underlying asset. Thus, even if you have limited capital, you can still participate in the Options markets
Uses of Options:
The two basic types of Options, i.e. Calls and Puts are primarily used for the following purposes:
Hedging: Buying Option is like buying insurance against your portfolio. It allows you to safeguard your portfolio of stock or futures from a possible erosion in value due to an adverse movement in the market.
Speculation: It means to have a view on where the market is headed next? You can use Options to profit from your view. If you are bullish, go long on Calls or sell Puts When you are bearish buy Puts or sell Calls
However, we strongly recommend that only the expert traders start selling Options, as it offers potentially unlimited losses and limited profits (up to the premium received)
Learn option trading strategies with Option Trading Made Easy course by Market Experts
Complex Options Strategies: Calls and Puts can be combined in infinite ways to give rise to various risk-reward ratios. Once you understand the option trading meaning and the risks associated with options trading, you can dive deeper into more complex exotic strategies to get a better return on investment.
Why to learn Option Trading meaning?
The key to becoming a successful trader lies in thoroughly understanding the trading product and the risks associated with it. Thus, you need to learn Option trading meaning from the experts to take full advantage of this powerful product. Dabbling in Options without understanding the product well can result in disasters.
We have just discussed the broad idea behind option trading meaning here. However, there are various other things like identifying the right strike prices, determining how much premium you should pay, Option Greeks and also drawing the risks and payoff profiles of the various Option strategies that you need to learn in details.
Where to learn about Option Trading Tips?
Elearnmarkets offers several high-quality training courses on Options. These are very student-friendly and delivered in English and Hindi by eminent market experts. Whether you are a student, investor, or a trader in other products looking to upgrade your skills, you can find these options trading courses and learn option trading meaning in detail. We are sure that you will be proud of the decision that you make.
