In finance, an option is a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset or instrument at a specific strike price on a specified date, depending on the form of the option.
Nowadays, investors are using options for different reasons, including speculation, hedging, spreading and creating synthetic positions. Using option wisely, investors can enhance their returns and reduce risks.
There are also different type of options depending on the type of underlying asset or instrument, including
- Stock options
- Commodity options
Many different options trading strategies are also available to choose from, including:
- Long call or long put
- Covered call
- Naked call or put option selling
- Option spreads
Some strategies have limited risks, while others involve high risks and carry substantial risk of loss, which are more for sophisticated investors.
Call us on 03 9655 1200, our accredited options brokers will help you to understand option and option strategies.
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