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Trade Options: Quickstart Guide

Views 335KFeb 21, 2024
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Introduction to Option

Options can be a useful tool for trading and investing, especially in volatile markets, allowing for leverage, the ability to hedge, and potentially generate income.

Though options trading involves risks and is not appropriate for all investors.

Options are a tool that can help manage risk exposure of portfolios or individual positions in response to market swings. In addition to risk hedging, options are now widely used by investors for speculation and by those seeking income.

Options can provide leverage which means the buyer can pay a relatively small premium for market exposure when compared to what it would cost to purchase the stock. An investor may see large percentage gains from comparatively small, favorable percentage moves in the underlying product.

However, if the underlying stock price does not rise or fall as anticipated during the lifetime of the option, leverage could magnify the investment's percentage loss.

These are basics about options. For many traders, options are no different from other assets that can be traded on the market.

The concept of “buy low and sell high” still applies to option trading. But just like stock trading, the order can vary. A trader can also sell high them buy low.

It may sound a bit confusing at first. That’s why we are bringing this course to you.

In upcoming courses, we'll walk you through the basics about options, show you the important factors for options pricing, and dive into some commonly used strategies.

Let’s get started.

Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.

This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

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