What Are Options?
Options are financial instruments that grant traders the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before a specified expiration date.
Types of Options Available on eToro
eToro offers two primary types of options: call options, which allow buying the asset, and put options, which allow selling the asset.
How to Trade Options on eToro
To trade options on eToro, select your desired asset, choose the option type, set the investment amount, and monitor your position until the option expires.
Benefits of Trading Options
Options provide flexibility in trading strategies, potential for leveraged returns, and opportunities to hedge against market volatility.
Risks Associated with Options Trading
Options trading involves significant risks, including the potential loss of the entire investment. It is crucial to understand these risks and manage them effectively.
Popular Options Trading Strategies
Common strategies include buying calls or puts, writing covered calls, and employing spread strategies to balance potential rewards and risks.
Risk Management Techniques
Effective risk management in options trading involves setting stop-loss orders, diversifying your portfolio, and limiting the size of individual trades to mitigate potential losses.
