When it comes to trading, there are various options to choose from. Each has its own unique set of risks and rewards, which is why traders need to understand what they’re getting themselves into before starting.
Options are a form of derivative trading, which can be used for various purposes such as hedging risk or speculating on price movements. They can be traded on exchanges just like stocks and offer investors a wide range of possibilities for trading strategies.
In addition, as options are derivatives, they are subject to margin requirements. This means that you need to have enough cash or securities in your account to cover the total notional value of the option in case it is exercised. However, options can also be complex and risky, so it is essential to understand the basics before trading them.
The two types of listed options available in Australia
There are …