Puja Tayal

Options trading is complex, and your trading platform plays a pivot role in the returns you generate. Online trading platforms offer various types of instruments, including stocks, ETFs, forex, futures, and options. If you are a non-US trader who wants to trade in the U.S. markets, you can if you have the necessary paperwork. So if you are a U.S. resident but not a citizen or a non-US citizen living outside of the U.S., you can open an account with an international or U.S.-based broker that accepts applications from your country of residence.

Options trading can be tricky and expensive. After all, it is a market that runs on traders’ expectations of the future price of an underlying asset. In the stock market, you have the luxury of time. Here you don’t. As an options trader, you not only have to predict the price movement but also the time when that price movement will occur. While that is not enough, you have a plethora of choices available in the options market.

What are the odds? Many say options are risky, complex, and not my cup of tea. They are complex only because traders put in all sophisticated lingo and make the transaction look complex. It is like solving E=MC2 without learning 2×2. If you understand the very logic behind this financial instrument, everything will fall into place.

Ever thought you could get paid for buying the stock you love? The Wheel options trading makes it possible. This strategy is an enhanced version of the Buy and Hold strategy of the stock market and allows you to earn money from a single stock in four ways. But as you know, nothing in the stock market world comes without risk. But the Wheel options strategy has a relatively lower risk and higher profitability than other strategies.

Options have gathered popularity as risky investment instruments. But do you know, options were invented to reduce risk? To give you an idea of options risk reduction ability, no amount of portfolio diversification across stocks or bonds could protect investor’s money from the 2008 financial crisis or the March 2020 pandemic crisis. It was only the options that protected investors from the downside risk.

Options are derivative contracts as they derive their value from the price movement of the underlying stock. But can it be reversed? Can options contracts influence their underlying stock prices?

Have you been investing in stocks, commodities, bonds for a long time? You have learned a lot about them and realized that you can predict how they move in the near term. It is time to step up the ladder, ace the game and try your hands on options trading. Options trading is complex and risky. You can make money in stocks without much knowledge, but you will stand to lose in the derivatives market without the right knowledge.