Options trading in Australia can be a lucrative venture, but it is essential to understand the terminology before getting started. We’ll provide you with five need-to-know options trading terms that will quickly help you get up to speed. With a basic understanding of these terms, you’ll be on your way to successful options trading in Australia. After reviewing this article, you can look at this broker’s site for types of options traded locally and start trading to apply your knowledge.
A call option is a deal that gives the holder the right to buy an asset at a fixed price within a pre-set timeframe. They offer traders the ability to handle their risk while still having the potential to profit from upward movements in the market. The trader pays a premium to purchase the contract when buying a call option. If the underlying asset price rises above the strike price before the expiration date, the trader will profit from the difference between the two prices.
However, if the price falls below the strike price, the trader will lose their initial investment. Therefore, call options are a way to speculate on future price movements while limiting potential downside risk.…