Is options trading risky happy
A:As with most tradibg vehicles, risk to some degree is inevitable. Option contracts are uappy risky due to their complex nature, but knowing how options work can reduce the risk somewhat. There are two types of option contracts, call options and put options, each with essentially the same degree of risk. Thus, knowing how each works helps determine opions risk of an option position. In order of increasing risk, take a look at how each investor is exposed.
Long Call OptionInvestor A purchases a call on a stock, giving him the rightBy understanding risk, you can become a better and more profitable trader.Many investors get excited about options riwky because they love the leverage that is possible when an investment goes well. While stock investors might make 10% or 20% returns on a stock, aggressive options investors could potentially make a 1,000% return in the same amount of time.
Is that true. For instance, in a book written by a well-respected duo of female financial riskky who cater to divorced and widowed women, there is a table that classifies types of investments. Whereas they consider is options trading risky happy to be moderate-risk investments, they include options in the high-risk category along with junBetter Together.
Never miss a trending story with yahoo.comas your homepage. Every new tab displays optoons Flickr photos and your most recently visited sites. Some people argue that options are riskier than other types of financial instruments. In fact, the CBOE reports that 30% of options contracts expire worthless.Obviously, if you own a stock outright, the possibility of its value falling to zero is quite slim. Only in cases where the company goes bankrupt do you stand to lose your entire investment.