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        Options ABC

        Views 50142023.03.31

        Why Do We Use Options?

        Today we will be talking about the advantages and disadvantages of options.

        Even though many of you already have experience trading options, it is still good to know if there is any other way to utilize options trading to your advantage.

        The advantages of options mainly include two parts:

        Part 1. Earning potential returns

        Generally, there are two ways to Earning potential returns trading options.

        Firstly, options can act as a leverage, it helps you to potentially gain with a relatively small amount of money invested.

        Secondly, options may provide potential stream of income.

        Part 2. Hedging risk

        In options trading, we can utilize options combination, which is also called the options strategy, to control or lower the amount of risk we are taking on.

        Options strategies will be introduced in detail later.

        The disadvantages of options

        The buyer of options can lose 100% of their investment, and the seller of the option can lose up to all the money they have in their account.

        However, if I am the seller of the option, this will not be the case.

        As the stock price swings up and down, my margin will be affected, and once my account balance is lower than the margin needed, I will be receiving a margin call.

        And if I am unable to add funds to maintain our margin level, I will suffer a margin closeout.

        Trade like a pro with moomoo

        Get free stock and start your professional trading today

        Terms and conditions apply right-arrow

        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 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. 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.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites and Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.