Why isn't everyone trading options? Well, there also are a few downsides to using them:
- The premium varies according to the strike price and date of the option, so the risk/reward ratio varies.
- SPOT options cannot be traded: once you buy one, you can't change your mind and then sell it.
- It can be hard to predict the exact time period and price at which movements in the market may occur.
- You may be going against the odds.
- The premium varies according to the strike price and date of the option, so the risk/reward ratio varies.
- SPOT options cannot be traded: once you buy one, you can't change your mind and then sell it.
- It can be hard to predict the exact time period and price at which movements in the market may occur.
- You may be going against the odds.
Source: http://www.investopedia.com/articles/trading/04/101304.asp
Tags: options trading, risk
Was this Tip useful?
This content can be found on the following page:
Get our content on your iGoogle page
RSS