Five need-to-know options trading terms in Australia
Options trading in Australia can be a lucrative venturehttps://www.circlessouthtampa.com but it is essential to understand the terminology before getting started. We’ll provide you with five need-to-know options trading terms that will quickly help you get up to speed. With a basic understanding of these termshttps://www.circlessouthtampa.com you’ll be on your way to successful options trading in Australia. After reviewing this articlehttps://www.circlessouthtampa.com you can look at this broker’s site for types of options traded locally and start trading to apply your knowledge.
Call option
A call option is a deal that gives the holder the right to buy an asset at a fixed price within a pre-set timeframe. They offer traders the ability to handle their risk while still having the potential to profit from upward movements in the market. The trader pays a premium to purchase the contract when buying a call option. If the underlying asset price rises above the strike price before the expiration datehttps://www.circlessouthtampa.com the trader will profit from the difference between the two prices.
Howeverhttps://www.circlessouthtampa.com if the price falls below the strike pricehttps://www.circlessouthtampa.com the trader will lose their initial investment. Thereforehttps://www.circlessouthtampa.com call options are a way to speculate on future price movements while limiting potential downside risk.…