Investors use options trading for various purposes such as earning extra income on their stock positions, earning extra income while waiting for their desired stock to drop to a certain price, and many more. Options Trading is the process of trading options. On the other hand, it can also be used by traders to magnify their returns and generate profit in any market condition. Options are a powerful tool that can be used by investors as a hedge from market crashes, while also generating recurring income. The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a certain period of time or on a specific date.” “a financial derivative that represents a contract sold by one party (the option writer) to another party (the option holder).
OPTIONS TRADING FOR BEGINNERS HOW TO
So, if you are planning to trade options in Singapore but don’t know where or how to get started, then you are just in the right place.īut before anything else, let us first define what options are: What are Options?Īn option is a contract between a buyer and a seller which gives the buyer the right to buy (call options) or to sell (put options) the underlying assets at a specific price on or before a certain date to the seller.įor a complete, academic definition, we refer to Investopedia which states: I’ll do my best to present the fundamentals that’ll help you get started in the right (and safer) direction. Thus, you should avoid using it if you do not understand its mechanics well. It is a complicated instrument where, unlike stocks, prices are determined by several factors that can easily swing from one end to the other.
While it can bring about huge profits, unprecedented losses can also happen if you do not know what you are doing. It remains a double-edged sword in the investor’s toolbox and many would regard it as a risky endeavour.
#4 There is Not Much Difference Between Options in Singapore and Options in US.#3 Singapore Uses Warrants Instead of Listed Options for Trading.#1 Be Wary of Unregulated Online Trading Platforms.5 Things to Know Before Trading Options in Singapore.What is the “Extrinsic Value” of an Option?.How is Options Trading different from Stocks Trading?.
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