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Some of them might be trading in the option of different asset class similar is the concept in crypto trading too. This is risky and can lose money easily as well if done without knowledge, skill and understanding. Trying to cover some basic so helps you all to understand.
An option gives trader the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified timeframe. There is always a time frame involved, whether you wish to trade for the current day, the following week, the month, or longer. Typically, traders buy or sell these options to manage their risks and to capitalize on short-term profits resulting from price fluctuations. We can profit in both rising and falling markets by taking short positions in falling market.
Time factor - This is an essential concept rooted in the time value of money. Time decay primarily affects the extrinsic value of an option, known as its time value. On the final day of expiration, the price will drop to 0, marking the end of your trade. As each day goes by, the time value of an option decreases, as the likelihood of the option being profitable by its expiration diminishes, ultimately reaching 0 on the last day.
Expiry Date – Also known as the maturity date, this is when the contract concludes and the price will slowly decrease to 0. This trade is highly time-sensitive. On the final day, you can also buy or sell options to enhance your position and capital for a short period. When you observe potential price fluctuations due to specific events, it becomes easier to profit by taking a call or put position.
Terms to know
Long : You buy with the anticipation that its price will increase. You realize profit when you sell it later at a higher price.
Short : Selling it initially at a higher price and purchasing later at a lower price. This is precisely the opposite of going long.
Hedge: Traders mitigate their positions to safeguard against potential downside risks arising from market fluctuations, which may be caused by geopolitical factors or any market uncertainties.
An option gives trader the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified timeframe. There is always a time frame involved, whether you wish to trade for the current day, the following week, the month, or longer. Typically, traders buy or sell these options to manage their risks and to capitalize on short-term profits resulting from price fluctuations. We can profit in both rising and falling markets by taking short positions in falling market.
Time factor - This is an essential concept rooted in the time value of money. Time decay primarily affects the extrinsic value of an option, known as its time value. On the final day of expiration, the price will drop to 0, marking the end of your trade. As each day goes by, the time value of an option decreases, as the likelihood of the option being profitable by its expiration diminishes, ultimately reaching 0 on the last day.
Expiry Date – Also known as the maturity date, this is when the contract concludes and the price will slowly decrease to 0. This trade is highly time-sensitive. On the final day, you can also buy or sell options to enhance your position and capital for a short period. When you observe potential price fluctuations due to specific events, it becomes easier to profit by taking a call or put position.
Terms to know
Long : You buy with the anticipation that its price will increase. You realize profit when you sell it later at a higher price.
Short : Selling it initially at a higher price and purchasing later at a lower price. This is precisely the opposite of going long.
Hedge: Traders mitigate their positions to safeguard against potential downside risks arising from market fluctuations, which may be caused by geopolitical factors or any market uncertainties.