What are the characteristics and risks of option trading?

Features: Compared with investment tools such as stocks and futures, the nonlinear profit and loss structure of options is different. It is the nonlinear profit and loss structure of options that makes options have obvious advantages in risk management and portfolio investment. Through different options, option combinations and other investment tools, investors can build portfolios with different risk-return conditions.

Risk: For option traders, both buyers and sellers are faced with the risk of adverse changes in the premium. This is the same as futures, that is, within the scope of commission, buy low and sell high, and you can make a profit by closing your position. On the other hand, it is a loss. Different from futures, the risk bottom line of option bulls has been determined and paid, and its risk is controlled within the premium range.

The risk of option short position is the same as that of future positions. Because the premium received by the option seller can provide corresponding guarantee, it can offset some losses of the option seller when the price changes adversely.

Extended data:

The leverage of options can help investors get more income with limited funds. If the market changes unfavorably, investors may lose more royalties. Therefore, investors should pay attention to the fact that leverage is a double-edged sword, regardless of futures or options.

If the option expires as an in-price option, investors will get 60% to 80% of their invested capital. On the other hand, if it is an out-of-price option, they will lose most of their single investment.

Options can provide investors with greater leverage. Especially short-term hypothetical options. Compared with the futures margin, the same number of contracts can be controlled with less use fees. Let's take flat options as an example and compare them with futures.

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