What are options?

US stock options trading reminder:

Options trading is a highly risky trading variety. Before you trade, please understand the relevant rules in detail.

1.Options Introduction

Option is a type of option that refers to the right to buy or sell a certain amount of a specific commodity at a specific price at a specific time in the future. It is a financial instrument based on futures, giving the buyer (or holder) the right to buy or sell the underlying asset. The holder of the option can choose to buy or not buy, sell or not sell within the time specified in the option, and can exercise or waive the right, while the seller of the option only has the obligation specified in the option contract.

2.Characteristics of options

• Flexibility and diversity: You can choose from a variety of trading strategies, such as buying bullish or putting options, based on market changes and personal investment strategies.
• High cost efficiency: Compared to buying stocks directly, options trading usually requires a lower initial investment, provides high leverage, and allows small funds to participate in large transactions.
• Risk management tools: Options can act as a protective mechanism to help you manage the latent risk of your portfolio, especially when the market is volatile.
• Strategies are diverse: from conservative profit strategies to aggressive speculative strategies, stock options support a wide range of trading strategies to meet the needs of different investors.
• Time value utilization: Utilize the time decay characteristics of options to earn premium through appropriate strategies and optimize investment returns.