Part 4 Learn Institutional Trading

Advantages of Option Trading

Leverage:
Options allow control over large quantities of an asset with a small investment (premium). This magnifies potential profits.

Limited Risk for Buyers:
When buying options, the maximum loss is limited to the premium paid.

Hedging Capability:
Options can offset potential losses in the underlying portfolio.

Flexibility:
Options can be combined in various strategies to suit market outlooks—bullish, bearish, or neutral.

Multiple Strategies:
Options offer numerous strategies like straddles, strangles, spreads, collars, and iron condors, giving traders the ability to profit in different market conditions.