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Why trade options on Webull?
Why trade options?
Options allow you to take advantage of both sides of the market. If you believe a stock is going up, you can buy calls and if you believe it is going down you can buy puts. Allowing you to capitalize in any market condition. Buying options do carry the risk of losing your initial investment if closed at a loss or expires worthless.
Leverage allows you to gain more exposure with less money. Each option contract is worth 100 shares of underlying security. Thereby you control a lot more assets with a small investment amount. If the option does not reach the required price by expiration though the option will expire worthless, which means you lose the premium paid.
Investors hedge to reduce risk. By purchasing put options you can hedge a portfolio or individual position using various strategies. This hedge effectively protects your underlying stock position for a specific timeframe.
One of the most popular use of options is to generate income. If you hold 100 shares of XYZ and you believe the stock is not going to move, you can sell calls against the position to generate income from option premiums. Subsequently, closing positions at a lower price will result in a loss and underlying positions can be called if assignment occurs.
Options involve risks and are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Please read Characteristics and Risks of Standardized Options before investing in options.
To learn more about options trading, please click this article Beginners Guide To Getting Started to view.
What is an option?
An option is a contract between a buyer and a seller. It gives the buyers (the owner or holder of the option) the opportunity to buy or sell the underlying asset at a specific strike price prior to or on a specified date. Options can provide investors with more opportunities than traditional equity buy/sell strategies.
What are the Advantages and Risks of Options?