The Basics of Options Trading for Beginners
If you're curious about growing your wealth and diversifying your investment strategy, learning the basics of options trading is a great place to start. While options trading may seem complex at first, understanding the core concepts can open doors to new financial opportunities. This beginner-friendly guide will help you understand what options are, how they work, and how you can start trading options with confidence. What is Options Trading? Options trading involves contracts that give investors the right, but not the obligation, to buy or sell an underlying asset at a specific price before a certain date. Options are considered derivatives because they derive their value from an underlying security, typically a stock. Key terms to know: Call Option: Gives the holder the right to buy an asset at a predetermined price. Put Option: Gives the holder the right to sell an asset at a predetermined price. Strike Price: The fixed price at which the holder can buy or sell t...
