Basic Information
|
|
|
|
|
|
|
|
Introduction to Options
Nowadays, many investors' portfolios include investments such as mutual funds, stocks, and bonds. But the variety of securities you have at your disposal does not end there. A type of security called an option presents a world of opportunity to sophisticated investors.
The power of options lies in their versatility. They enable you to adapt or adjust your position according to any situation that arises. Options can be as speculative or as conservative as you want. This means you can do everything from protecting a position from a decline to outright betting on the movement of a market or index.
This versatility, however, does not come without its costs. Options are complex securities and can be extremely risky. This is why, when trading options, you'll see a disclaimer like the following:
Options involve risks and are not suitable for everyone. Option trading can be speculative in nature and carry substantial risk of loss. Only invest with money that you allocates to in high-risk securities. Basically, this is capital that you can lose without having to sleep on the streets. Investors who speculate in options or futures contracts should only use risk capital.