WHAT IS TRADING OPTION
what is trading option? A trading option is an agreement that allows the holder to buy or sell a security at a specific price and time period. The term is also used to refer to the contract itself, which is a document that describes the terms and conditions of the option. The main advantage of trading options is that it allows the holder to buy at a lower price than the market price, and sell at a higher price than the market price. This means that a trader can profit from the difference between the two prices, which is often referred to as the option premium. Unfortunately, the risk of trading options is that the trader may unintentionally, or unknowingly, overpay. This is because the option can be exercised before the holder actually has the asset to sell or buy, unless there is a special agreement in place. There are three types of options: Call options : These are the most common type of option, as they allow the holder to buy at a specified price and time period. Put ...