{"id":91931,"date":"2023-08-14T22:02:43","date_gmt":"2023-08-14T22:02:43","guid":{"rendered":"https:\/\/arielle.com.au\/?p=91931"},"modified":"2026-01-22T04:50:13","modified_gmt":"2026-01-22T04:50:13","slug":"what-is-options-trading","status":"publish","type":"post","link":"https:\/\/arielle.com.au\/what-is-options-trading\/","title":{"rendered":"What Is Options Trading?"},"content":{"rendered":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 11<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>\n<p>If you&#8217;re new to options trading and feeling confused or overwhelmed, please know you&#8217;re not alone. While the learning curve for trading options is steeper than for share trading or <a href=\"https:\/\/arielle.com.au\/how-to-invest-in-index-funds-australia\/\">investing in indexes<\/a>, you will see that the concept is not complicated once you grasp the basics.<\/p>\n\n\n\n<p>However, trading options is a double-edged sword &#8211; because it involves risks that could devastate your finances, namely leveraging. <\/p>\n\n\n\n<p>Let&#8217;s discuss the potential risks and rewards of trading options, the financial markets you can trade in, and how to start trading options in Australia.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-to-trade-futures-in-australia\/\">How To Invest In Futures<\/a>).<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Exactly Is An Option?<\/strong><\/h2>\n\n\n\n<p>An option is a financial contract that grants the holder the right, but not the obligation, to buy or sell an underlying asset by a specific date and price. <\/p>\n\n\n\n<p>To obtain this right, the buyer pays a premium to the seller of the contract.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"790\" src=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks-1024x790.jpg\" alt=\"options trading risks\" class=\"wp-image-93436\" srcset=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks-1024x790.jpg 1024w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks-300x232.jpg 300w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks-768x593.jpg 768w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks-1536x1186.jpg 1536w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-risks.jpg 1640w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>In a nutshell, options trading allows you to speculate on:<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>How much<\/strong> the price of the underlying asset will rise or fall.<\/li><li><strong>The date <\/strong>that this price changes will occur on.<\/li><\/ul><\/div><\/div>\n\n\n\n<p>Unlike trading shares, you won&#8217;t own a piece of a company until you exercise the option and take ownership of the underlying stock.<\/p>\n\n\n\n<p>Here&#8217;s another way of looking at things:<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Say you want to buy a house,<\/strong> but you&#8217;re still undecided on whether to go through with it because it depends on a job offer.<\/li><li><strong>You can agree <\/strong>with the real estate agent to take an option on the house, which you&#8217;ll pay a premium for, locking in that price.<\/li><li><strong>Depending on whether or not you land the job,<\/strong> you can choose whether to proceed with the house purchase at the initially agreed price (even if the price has increased), or you can walk away from the deal, losing only your premium.<\/li><\/ul><\/div><\/div>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/best-share-trading-platform-australia\/\">Best Share Trading Platforms For Australians<\/a>).<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Are Put And Call Options?<\/strong><\/h2>\n\n\n\n<p>There are two main types of options. Both allow you to speculate on the price of the asset.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td><strong>Call options<\/strong><\/td><td>Give the option holder the right (but not the obligation) to <strong>buy <\/strong>the underlying asset at a predetermined price (\u201cstrike price\u201d) within a specific timeframe.<\/td><\/tr><tr><td><strong>Put options<\/strong><\/td><td>Give the option holder the right (but not the obligation) to <strong>sell <\/strong>the underlying asset at a predetermined price (\u201cstrike price\u201d) within a specific timeframe.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Options allow investors to make strategic bets on how the asset will perform in the future.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>Investors buy call options when they believe the underlying asset&#8217;s market price will rise. <\/span><\/div><\/div>\n\n\n\n<p>When the stock price rises, the call option increases in value, and the investor benefits.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/ig-review\/\">IG Review: Good Platform For CFD Traders?<\/a>)<\/strong><\/p>\n\n\n\n<p> At that point, the call buyer can \u201cexercise\u201d the call option or buy the underlying stock at the strike price.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"790\" src=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example-1024x790.jpg\" alt=\"call option example\" class=\"wp-image-93428\" srcset=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example-1024x790.jpg 1024w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example-300x232.jpg 300w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example-768x593.jpg 768w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example-1536x1186.jpg 1536w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/call-option-example.jpg 1640w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Meanwhile, investors who believe the underlying asset&#8217;s market price will go down, sell or &#8220;write&#8221; a call option. <\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>When the stock price falls, the put option increases in value, and the investor benefits. <\/span><\/div><\/div>\n\n\n\n<p>At that point, they can also &#8220;exercise&#8221; the put option or sell the underlying stock at the strike price.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"790\" src=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example-1024x790.jpg\" alt=\"put option example\" class=\"wp-image-93431\" srcset=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example-1024x790.jpg 1024w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example-300x232.jpg 300w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example-768x593.jpg 768w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example-1536x1186.jpg 1536w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/put-option-example.jpg 1640w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Is An Underlying Asset?<\/strong><\/h2>\n\n\n\n<p>This refers to the type of financial instrument the option is linked to, such as stocks, currencies, commodities, currencies, and indexes.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span><em>The price of the option is determined, in part, by the underlying asset price.<\/em><\/span><\/div><\/div>\n\n\n\n<p>With options, you can speculate on the price of any of these underlying assets without the obligation to buy.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-to-buy-tesla-tsla-stocks-and-shares\/\">How To Buy Tesla [TSLA] Stocks<\/a>).<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Is A Derivative?<\/strong><\/h2>\n\n\n\n<p>A derivative is a financial contract in which the market value is <em>derived<\/em> from the price of the underlying asset (e.g., stock, bonds, index or currency). <\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Options are a type of derivative.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Is A Strike Price And An Expiration Date?<\/strong><\/h2>\n\n\n\n<p>The strike price (or exercise price) is the predetermined price at which the owner of an option can buy or sell the underlying asset.<\/p>\n\n\n\n<p>A trader must exercise their options before or on the expiration date. After the expiration, the option ceases to exist, and its market value is reduced to zero.<\/p>\n\n\n\n<p>There are two different exercise styles &#8211; American and European. <\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td><strong>American style<\/strong><\/td><td>The option can be exercised at any time prior to the<br>expiry.<\/td><\/tr><tr><td><strong>European style<\/strong><\/td><td>The option can only be exercised on the expiry day.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Most <a href=\"https:\/\/arielle.com.au\/what-is-asx200\/\">stock options traded on the ASX<\/a> are American-style.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Are Intrinsic And Extrinsic Values?<\/strong><\/h2>\n\n\n\n<p>The <strong>intrinsic value<\/strong> of an option&#8217;s price represents the immediate profit that would be realised if the option was exercised and sold immediately.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span><em>An option is said to be &#8220;in the money&#8221; when it has intrinsic value and &#8220;out of the money&#8221; when it has no intrinsic value.<\/em><\/span><\/div><\/div>\n\n\n\n<p>The <strong>extrinsic value<\/strong>, also known as time value, is how much an option&#8217;s price exceeds its intrinsic value, and it&#8217;s influenced by factors such as time to expiration and market volatility.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-to-buy-apple-aapl-stocks-shares\/\">How To Buy Apple [APPL] Stocks<\/a>).<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Are You A Writer Or A Taker? <\/strong><\/h2>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Option sellers<\/strong> are also known as \u2018writers\u2019 &#8211; because they underwrite the obligation to deliver or accept a parcel of shares covered by an option.<\/li><li><strong>Option buyers<\/strong> are known as \u2018takers\u2019, as they take up the right to buy or sell shares.<\/li><\/ul><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Options Work.<\/strong><\/h2>\n\n\n\n<p>Let me reiterate this key point &#8211; when trading options, you speculate on the movement of a market without ever owning the underlying asset. <\/p>\n\n\n\n<p>You&#8217;re under no obligation to exercise an option if a trade turns out to be unprofitable.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span><em>The only money you stand to lose is the premium you paid for the option contract.<\/em><\/span><\/div><\/div>\n\n\n\n<p>In many ways, the premium can be considered insurance.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/etoro-vs-commsec\/\">CommSec vs eToro: Which Is Best?<\/a>)<\/strong><\/p>\n\n\n\n<p>Here&#8217;s a quick example:<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Nearing expiration,<\/strong> the share price of Tesla has risen to $280 per share.<\/li><li><strong>As the holder of the call option,<\/strong> you can exercise your right to buy 100 shares of Tesla at the predetermined strike price of $250 per share.<\/li><li><strong>After doing so, <\/strong>your profit per share would be $280 (stock price) &#8211; $250 (strike price) = $30.<\/li><li><strong>After deducting <\/strong>the premium ($10), your net profit would be $30 &#8211; $10 = $20 per share.<\/li><li><strong>Since one contract represents 100 shares,<\/strong> your total profit would be $2,000.<\/li><\/ul><\/div><\/div>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Don&#8217;t worry if the example above doesn&#8217;t sink in straight away. We&#8217;ve all been there.  Just keep reading and let your subconscious process it for a while.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What Is Leverage?<\/strong><\/h3>\n\n\n\n<p>Something worth reiterating is that many investors are attracted to options because they offer <em>leverage<\/em>. Leverage is essentially <a href=\"https:\/\/arielle.com.au\/what-is-leverage-in-trading\/\">borrowed money that&#8217;s invested in financial assets<\/a>.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span><em>That means a buyer can pay a relatively small premium for market exposure in relation to the option contract value.<\/em><\/span><\/div><\/div>\n\n\n\n<p>Here&#8217;s a scenario:<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>If a trader has $2,500 to invest,<\/strong> they could purchase 10 ordinary shares at $250 per share.<\/li><li><strong>However,<\/strong> with a leveraged option, the trader could control 100 shares with the same $2,500 investment \u2013 a contract value of $25,000.<\/li><\/ul><\/div><\/div>\n\n\n\n<p>While leveraging means your profits can be magnified, so can your losses.<\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Leveraging is something beginners should steer well clear of. Lack of knowledge and experience only heightens the associated risk.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How To Read A Stock Option.<\/strong><\/h2>\n\n\n\n<p>Stock options are often the first port of call for options traders. You must know exactly how to interpret a stock option quote before executing a trade.<\/p>\n\n\n\n<p>When you&#8217;re reviewing quotes for trade options in an options chain (a matrix listing all available options contracts for underlying securities), they&#8217;ll appear as a string of text like the following:<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>TSLA SEPTEMBER 22, 2023, 70 CALL AT $4.50<\/span><\/div><\/div>\n\n\n\n<p>(From left to right: stock symbol, expiry date, strike price, type, premium.)<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-to-buy-tesla-tsla-stocks-and-shares\/\">How To Buy Tesla [TSLA] Stocks<\/a>).<\/strong><\/p>\n\n\n\n<p>Sometimes, to confuse matters, the date is written in numbers with no spaces. So you may see the above example written as follows:<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>TSLA20230922C00070000<\/span><\/div><\/div>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Not all matrices display the same information in the same order, so it&#8217;s best to get familiar with your options trading account before executing any put or call options.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Assets Can I Trade Options With?<\/strong><\/h2>\n\n\n\n<p>Broadly speaking, there are four different types of options you can trade. Most beginner investors should stick with shares and ETF options before understanding the complexities involved with other financial assets.<\/p>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Shares (Equity Options).<\/strong><\/h3>\n\n\n\n<p>Share options, also known as equity options, are options on an individual company&#8217;s shares. <\/p>\n\n\n\n<p>If you&#8217;re options trading in Australia, you can only trade equity options on ASX-approved companies (typically the ASX100).<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/what-is-asx200\/\">What Is The ASX200 And How Does It Work?<\/a>)<\/strong><\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Remember that you won&#8217;t receive dividends when holding a call option. It&#8217;s only when you exercise your option and own the underlying shares that you get such a benefit.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. ETF Options.<\/strong><\/h3>\n\n\n\n<p>Exchange-traded funds (ETFs) are traded on stock exchanges in a similar way to individual stocks. <\/p>\n\n\n\n<p>An ETF gives investors exposure to multiple assets with a single purchase. It can be a cost-effective way of diversifying a portfolio.<\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">With ETFs, you can also trade options and speculate on a particular sector, such as technology, or those belonging to a different market, such as Northern Europe.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. Index Options.<\/strong><\/h3>\n\n\n\n<p>Index options allow a trader to speculate on the performance of indices, such as the ASX 200 and XGD. The one difference to be mindful of with index options is that options can only be exercised on the expiry date (not before).<\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">Since you won&#8217;t actually be buying shares or assets when buying options, all trades are settled in cash.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>4. Low Exercise Price Options (LEPOs).<\/strong><\/h3>\n\n\n\n<p>A LEPO is an Australian Stock Exchange-traded option with a low exercise price. <\/p>\n\n\n\n<p>They&#8217;re designed to track the underlying asset\u2019s price. But because the exercise price is comparably low to other options, the premium you pay is much higher.<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>The best part is that LEPOs don&#8217;t require an upfront payment; investors make margin payments throughout the LEPO&#8217;s life.<\/span><\/div><\/div>\n\n\n\n<p>You can find out more about Australian LEPOs <a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/www.asx.com.au\/documents\/resources\/UnderstandingLEPOs.pdf\">here<\/a>.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Risks &amp; Benefits Of Trading Options.<\/strong><\/h2>\n\n\n\n<p>Investing and speculating are two different things. <\/p>\n\n\n\n<p>According to Benjamin Graham, the critically acclaimed author of the bestseller <em>The Intelligent Investor<\/em>:<\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>&#8220;You must never delude yourself into thinking that you\u2019re investing when you\u2019re speculating.&#8221;<\/span><\/div><\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"359\" src=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-1024x359.jpg\" alt=\"\" class=\"wp-image-95054\" srcset=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-1024x359.jpg 1024w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-300x105.jpg 300w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading-768x269.jpg 768w, https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/09\/options-trading.jpg 1415w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><em>Above: Options trading is not for beginners. This Reddit post captures it perfectly: if you&#8217;re asking for options trading tips on Reddit, you should not be trading options.<\/em><\/p>\n\n\n\n<p>Education, then, is the difference between the two. You must educate yourself about the risks associated with options trading and manage them accordingly.<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/magnificent-7-stocks\/\">Why Are Magnificent 7 Stocks Soaring<\/a>)?<\/strong><\/p>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3 Potential Risks Of Options Trading.<\/strong><\/h3>\n\n\n\n<p>All forms of trading and investing carry risks. Make sure you&#8217;re familiar with what you stand to lose.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>1. Limited Time.<\/strong><\/h4>\n\n\n\n<p>Each option has an expiration date. The clock is always ticking, and the option&#8217;s value diminishes over time. <\/p>\n\n\n\n<p>If you hold on for too long, and the underlying security&#8217;s price doesn&#8217;t move in the desired direction, an investor can lose their premium.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>2. Losses.<\/strong><\/h4>\n\n\n\n<p>Leveraging is the riskiest aspect of options trading, which is the borrowing of money to gain greater exposure to an option. <\/p>\n\n\n\n<p>You can multiply your gains this way, but your losses can also be magnified. It&#8217;s a dangerous move for a new investor.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>3. Complexity.<\/strong><\/h4>\n\n\n\n<p>As I&#8217;m sure you&#8217;re now aware, options are complex assets, especially for those who are completely new to trading. <\/p>\n\n\n\n<div class=\"indent-wrapper\"><div class=\"indented-text\"><span>You should refrain from investing until you&#8217;ve got some practice under your belt with a demo account.<\/span><\/div><\/div>\n\n\n\n<p>Think about it&#8230; do athletes step onto a pitch without going through rounds of rigorous training? <\/p>\n\n\n\n<p>Do performers step out on stage without rehearsing? Then why the heck would you invest your money without honing your skills first?<\/p>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-do-franking-credits-work\/\">How Do Franking Credits Work?<\/a>)<\/strong><\/p>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3 Potential Benefits Of Options Trading.<\/strong><\/h3>\n\n\n\n<p>Options trading is attractive to traders because of its unique risk and cost profile.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>1. Risk Management.<\/strong><\/h4>\n\n\n\n<p>The right to buy but no obligation makes options trading attractive to new investors. <\/p>\n\n\n\n<p>If your predictions for the price of the underlying asset are way off, and you choose not to exercise your options, then the most you stand to lose is the premiums paid \u2013 a fraction of the losses you would have otherwise incurred had you acquired shares.<\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Important!<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">With options trading, you know the maximum potential losses upfront.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>2. Low cost.<\/strong><\/h4>\n\n\n\n<p>The options premium is generally a fraction of the cost of buying the underlying asset outright. As such, trading options is attractive to first-time investors on a smaller budget.<\/p>\n\n\n\n<div style=\"height:58px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>3. Hedging.<\/strong><\/h4>\n\n\n\n<p>Hedging is commonplace in options trading. Let&#8217;s say, for instance, that you own shares of Tesla. <\/p>\n\n\n\n<p>You could buy a put option to mitigate the potential losses if you&#8217;re worried about an impending share price drop because of a bad earnings report or a company scandal.<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>If the share price does drop drastically<\/strong>, you can exercise your put option and still sell your stock at the higher strike price.<\/li><li><strong>If the share price doesn&#8217;t drop<\/strong> and continues its upward trajectory, you can let your put option expire, only losing the premium paid for the contract.<\/li><\/ul><\/div><\/div>\n\n\n\n<p><strong>(Related: <a href=\"https:\/\/arielle.com.au\/how-to-invest-money-in-australia\/\">How To Invest Money In Australia<\/a>).<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Start Trading Options In Australia<\/strong>.<\/h2>\n\n\n\n<p>Getting going is easier than you think. That&#8217;s why you need to be conscious of these three steps before making any rash decisions.<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Weigh up the best brokerage platforms.<\/strong> The <a href=\"https:\/\/arielle.com.au\/brokerage-fees-australia\/\">fees vary by broker<\/a>, as does the quality of their platform interface and tools.<\/li><\/ul><\/div><\/div>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Set up a demo account. <\/strong>I know it&#8217;s tempting to start placing your bets with real money, but rushing into trading is a surefire way of haemorrhaging your hard-earned savings. Take it from Warren Buffet who says, &#8220;The stock market is a device for transferring money from the impatient to the patient.&#8221;<\/li><li><strong>Decide on your strategy.<\/strong> Long calls, long put, short put, married put, covered call strategy? You&#8217;ll likely employ a hybrid approach to options trading strategies. Research the pros and cons of each and test them out in your demo account to get a feel for the right ones for you.<\/li><\/ul><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Frequently Asked Questions About Trading Options.<\/strong><\/h2>\n\n\n\n<p>Here are some additional insights into options trading that you should know before signing up for a trading account:<\/p>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What Is Hedging In Options Trading?<\/strong><\/h3>\n\n\n\n<p>Hedging is one of many investment strategies to mitigate the losses of an asset&#8217;s adverse price moves. <\/p>\n\n\n\n<p>For example, an investor may want to hedge in the event of market uncertainty.<\/p>\n\n\n\n<p>An asset may experience a sudden drop in stock price owing to some damning news, the effects of which are likely to be short term. <\/p>\n\n\n\n<p>If an investor hedges, and buys a put option with a strike price close to its current market price, the option\u2019s gains limit the investor&#8217;s losses.<\/p>\n\n\n\n<p>Now, the investor can either cash out of the put option once the short-term volatility is over (pocketing the gain), or &#8211; if the downward trend continues &#8211; at least their losses are cancelled out.<\/p>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Why Do People Lose So Much Money With Options?<\/strong><\/h3>\n\n\n\n<p>Traders often incur financial losses by holding options too close to their expiration date. <\/p>\n\n\n\n<p>The closer an option is to the expiry date, the faster the time value deteriorates.<\/p>\n\n\n\n<p>Investors need to secure a favourable price and exit the trade with a profit while there is still some time value remaining. Timing is everything.<\/p>\n\n\n\n<div style=\"height:55px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What Do The Greek Symbols Mean In Options?<\/strong><\/h3>\n\n\n\n<p>You might be wondering what the heck Greek symbols have to do with options trading. As if options trading wasn&#8217;t complicated enough, you&#8217;ll need to familiarise yourself with some more jargon:<\/p>\n\n\n\n<div class=\"arrow-wrapper\"><div class=\"arrow-list\"><ul><li><strong>Delta <\/strong>measures how sensitive an option price is to the underlying market&#8217;s movement. Delta can be used to work out how much impact the market will have on the value of your options.<\/li><li><strong>Gamma <\/strong>is a derivative of delta and measures how much an option\u2019s delta moves.<\/li><li><strong>Theta <\/strong>measures the extent to which an option\u2019s price decays over time. A high theta suggests that the option is close to the expiration date.<\/li><li><strong>Vega<\/strong> is a measure of an option&#8217;s sensitivity to volatility in the underlying market.<\/li><li><strong>Rho<\/strong> indicates how interest rate changes are likely to move an option\u2019s price.<\/li><\/ul><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Bottom Line On Options Trading.<\/strong><\/h2>\n\n\n\n<p>Now that you know the basics of options trading, you&#8217;re probably not as confused about what options are. <\/p>\n\n\n\n<p>Remember that this is an advanced trading strategy, and one that carries a significant level of risk. Always consult a finance professional for personal advice &#8211; before you start trading options.<\/p>\n\n\n\n<div class=\"wp-block-create-block-tip-block tip-wrapper\"><div class=\"row\"><div class=\"col-md-12\"><div class=\"card-wrapper\"><div class=\"card-title\"><div class=\"icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 14.33a5 5 0 1 1 5 0v4.17h-5v-4.17Zm4.25-1.3-.75.44V17H9v-3.53l-.75-.44a3.5 3.5 0 1 1 3.5 0Z\" fill=\"#656E83\"><\/path><path d=\"M9.25 1v2h1.5V1h-1.5ZM5.53 4.47l-1.5-1.5-1.06 1.06 1.5 1.5 1.06-1.06ZM15.53 5.53l1.5-1.5-1.06-1.06-1.5 1.5 1.06 1.06ZM1 10.75h2v-1.5H1v1.5ZM17 10.75h2v-1.5h-2v1.5Z\" fill=\"#656E83\"><\/path><\/svg><\/div><h3 placeholder=\"Tip Title Goes Here\">Disclaimer.<\/h3><\/div><div class=\"card-content\"><p placeholder=\"Tip Content Goes Here\">The information presented here is general in nature and does not endorse any investment product, market, provider, or service. It is not intended as financial advice or a recommendation to trade &#8211; or not to trade. Trading futures, shares, ETFs, options, CFDs, and forex involves a high level of risk and may result in significant losses, particularly when leverage is used. Past performance does not guarantee future results. Before trading, consider whether the product is appropriate for your circumstances and seek independent professional advice. Refer to the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) on the provider\u2019s website.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:27px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Tommy<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 11<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>If you&#8217;re new to options trading and feeling confused or overwhelmed, please know you&#8217;re not alone. While the learning curve<\/p>\n","protected":false},"author":13,"featured_media":92210,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_uag_custom_page_level_css":"","_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[267,304],"tags":[],"class_list":["post-91931","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money","category-start-share-trading"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What Is Options Trading?<\/title>\n<meta name=\"description\" content=\"An option is the right (but not the obligation) to buy or sell an asset at a specific price by a specific date.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/arielle.com.au\/what-is-options-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Options Trading? A Beginners Guide On Trading Options.\" \/>\n<meta property=\"og:description\" content=\"An option is the right (but not the obligation) to buy or sell an asset at a specific price by a specific date.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/arielle.com.au\/what-is-options-trading\/\" \/>\n<meta property=\"og:site_name\" content=\"Arielle Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ArielleExecutive\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-08-14T22:02:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-01-22T04:50:13+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/arielle.com.au\/wp-content\/uploads\/2023\/08\/what-is-options-trading.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1490\" \/>\n\t<meta property=\"og:image:height\" content=\"838\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Tommy Crabtree\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"What Is Options Trading? A Beginners Guide On Trading Options.\" \/>\n<meta name=\"twitter:creator\" content=\"@arielleexec\" \/>\n<meta name=\"twitter:site\" content=\"@arielleexec\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tommy Crabtree\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"14 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What Is Options Trading?","description":"An option is the right (but not the obligation) to buy or sell an asset at a specific price by a specific date.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/arielle.com.au\/what-is-options-trading\/","og_locale":"en_US","og_type":"article","og_title":"What Is Options Trading? 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