Why is the options market so popular?

Indeed, why? Some attribute that to various advantages over stock exchange, and others love the fixed risk and return. But the vast majority of the parties work in this market due to the variety of tools it provides. Indeed, the number of different tools that can alter the investments is high, and that creates a chance of a high return. Some tools help the player to make a profit in a highly volatile market. Other tools assist in the trading on a market that has no volatility. The variety of choices the trader has is great, and that is one of the things that attract both speculators and hedgers.

Some basic benefits of the Options market

jump-into-the-market-with-put-options-622x415An options trader is always aware of the potential loss, the risk percentage and the amount they might lose. And they are also fully aware of the profit, the return percentage and the risk versus reward chances. A standard trader will limit the amount they risk with basic investments. An experienced trader that hunts big profit will use leverage to increase their return. They will increase the amount they might lose for the potential gain that will be exponentially bigger.

boekhoudkantoor_six_diensten5A stock whose price doesn’t move in any direction can bring the profit to a trader on the options market. An investor has the choice to invest in options with underlying assets that stay at the same price level or even in the assets whose prices go down.

Hedging is the most common investment in the options market. The companies, corporations, and banks invest money in options to offset the possible losses on the stock exchange. Contrary to the popular belief, the majority of the money (total cash invested) in this market comes from hedging and not from speculators. Only about a 5 percent of all cash invested in the options belong to the speculators; everything else comes from many different companies.

Some other benefits of the Options market

acciones1-590x200Fees and other commissions are present on all markets, but they are the lowest on this one. High level of competition between numerous brokerages created an environment filled with discounts and very low trading fees. Instead of paying high commissions for every possible action, an options trader pays a fee only when his trade ends in plus. Even at that point, the fee is very low (going up to 20 percent in the most extreme cases).

acquisizione-dati-energy-manager-ca-monTo learn how to make trading even safer click here. Many strategies sprung around these programs and the work quite well.

Reducing a loss or even making a profit through the re-sale of the trade is an option as well. The trader has to buy the option and then wait for the change of the chances. Once that happens the win amount of the option shifts and a trader can sell that option to another individual, and retreat from the deal with a difference in prices also known as the premium. Some people specialize in this kind of exchange and only a small portion of them succeed in it.

Author: Juan Mulkey

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