Proven option strategies
Options can help you protect your portfolio and take advantage of trading opportunities, yet they also have risks. Aurora Markets helps you take advantage of the flexibility and power that options can provide – while informing you of the risks to avoid.
How they work
Options are derivatives based on the value of underlying securities such as shares. An options contract offers you the opportunity to buy or sell the underlying asset, depending on the type of contract you hold. That means options enable you to benefit from both rising and falling markets.
A call option gives you the right to buy a security at a fixed price on or before a fixed date – so you can profit from a rising market by locking in a price in advance.
A put option gives you the right to sell a security at a fixed price on or before a fixed date – so you can benefit from a falling market or protect your portfolio, by locking in a sale price before the market falls.
However, options are complex products and you need to fully understand the risks which include potentially unlimited losses. The Aurora Markets team can help you harness proven, sensible option strategies suited to your appetite for risk and level of investment experience.
Benefits of trading options
- Options enable you to generate wealth from both rising and falling markets – offering you profit-taking strategies that are independent of market direction.
- You can protect your capital by using options as a hedging tool, reducing your risk of capital loss – like a form of investment insurance. You can set a floor to ensure that your losses do not exceed a certain amount.
- Exposure to shares can be gained for a much lower cost by using options than by buying shares. And if the trade goes your way, then you benefit just as much as if you bought the shares.
- Due to their flexibility, options also open up a broad range of advanced trading strategies for sophisticated investors. Options allow traders to craft their positions based on the risk-to-reward criteria of each opportunity.
Aurora Markets helps you to take advantage of the benefits that options can provide and informs you of the risks to avoid.