What is US Stock Option

What is US Stock Options?

Option refers to a contract that have been reached by buyer and seller, which allows the buyer to have a right to buy or sell a certain amount of specific subject at a both agreed price in a both agreed time in the future.

For options buyers, the payment of the premium gives the buyer only the right to operate at an agreed price in the future and without any obligation; for options sellers, they only have the obligation to fulfil the contract and without any right, their subsequent operations must rely on the decisions of their corresponding trading counterparty.

 

Types of Options

Assorted by the right of options buyers, options can be classified as “Call” and “Put”.

Call options can be referred as buying right, giving the options owner the right to buy an asset at a specific price in a specific time. Call options is similar to holding the long position of a stock, the call option buyers are expecting the stock price can rise dramatically before the option expire.

Put options can be referred as selling right, giving the options owner the right to sell an asset at a specific price in a specific time. Put options is similar to holding the short position of a stock, the put option buyers are expecting the stock price can drop before the option expire.

 

Advantages of Options

Two-Way Trading, verify your trend judgement in different ways by buying call or put.

Flexible Leverage, multiple leverage options to fulfil every needs.

Plentiful Tactics, building strategic portfolio depends on different market situations.

 

Risk Reminder

The risk of options trading is very high. In some situation, the loss bore by customers may exceed the initial margin deposit. Investors should understand the types of options (Call Options or Put Options) and the related risk they are planning to trade no matter they are buying or selling options.